Margate Theatre v. White
In this case, the court held that the description of an insured's business in an insurance policy includes work necessary for and incidental to that main activity, even when performed independently of the main activity
DMC Category Rating: Confirmed/Developed
This case note is based on an Article in the November 2005 Edition of the ‘(Re)insurance Bulletin’, published by the Insurance and Reinsurance teams at the international firm of lawyers, DLA Piper Rudnick Gray Cary. DLA Piper is an International Contributor to this website.
The work had involved cutting out the existing valve which served as a termination point of the fire main and replacing it with a new bleed valve and stop tap.
In February 2005, Mr White brought AXA into the proceedings as a Part 20 defendant (third-party proceedings), on the grounds that it had wrongly declined to accept liability under the policy. The issue of AXA's liability was heard as a preliminary issue.
The public liability section of Mr White's insurance policy covered his business against accidental injury or loss or damage to property "in connection with the business…" A schedule described the insured as "Mr Patrick White t/a Moleing Services" and the business as "groundwork and pipe moleing". This was the same description of the business as had appeared in Mr White's public liability and employer's liability policy for several years (albeit with different insurers).
Mr White argued that groundwork and pipe moleing can include, not only the boring of the tunnel and the laying of the pipes, but also the installation and connection of the water supply. The work at the theatre was similar to the sort of final termination/connection work that he would frequently carry out as part of his pipe moleing activities.
But did this fall within the description of the business? In the judge's view, it did. The description in the policy was naturally brief. It would be ridiculous to expect a long and laborious list of every task the insured might perform. It was common sense that it would include work necessary for and incidental to the business.
In addition, the cover provided was in respect of loss or damage to property occurring "in connection with" the business of groundwork and pipe moleing. The phrase "in connection with" was to be construed widely and would include work incidental to the business.
An insurer is presumed to be acquainted with the practice of the trade he insures. AXA was, therefore, deemed to know what work was necessary for and incidental to groundwork and pipe moleing, whether or not it was spelt out in the policy.
AXA complained that this result meant Mr White would get insurance cover for plumbing work when he had not paid the (higher) premium for plumbing. The judge rejected this argument. It did not follow that Mr White's business would be categorised as plumbing. Many specialist contractors carry out work that is capable of falling within a number of different categories. It was up to the insurer to decide which the appropriate one should be.
The judge also dismissed the argument that the work did not fall within the definition because it was not preceded by any boring or pipe laying. It would be extraordinary to have a situation where a particular task might be covered if it was carried out as part of other works but not if it was carried out on its own.
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