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Case Review: Insurance
Summary of some of the decisions made by the Mediators on some of the complaints received by FMB.
This summary is for information only and should not be used for other purpose.
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FMB/GI 0169 - Insurers' Right to seek ContributionDamage
The insured, a motor workshop, had a policy issued by the insurers covering machineries, equipment, stock-in-trade and customer's vehicle held in trust or custody. A vehicle belonging to the insured's customer (APG) was stolen and the insured submitted a claim under the said insurance policy. The insurers admitted liability but offered to pay only 50% of the market value of the insured vehicle on the ground that the vehicle was also insured by the owner (APG) under a private car policy issued by B Company. The insurers maintained that B Company should bear the rateable proportion of the loss by virtue of contribution.
In North British & Mercantile Insurance Co v London Liverpool & Globe Insurance Co (1877) 5 Ch D 569 the court held that a right of contribution arose only when the policies were taken out by the same person to insure against the same risk. Thus, an insurer has no right to seek contribution from another insurer if the persons insuring the risk are different even though the risk insured may be the same. In the matter under reference the policies covering the stolen vehicle were taken up by different persons - the insured to cover their interest as the bailee of the goods belonging to their customers and APG to cover their interest as the owner of the vehicle.
In the light of the above authority the insurers revised their decision and approved the claim.
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