The Insurance Brokers Association of New Zealand (IBANZ
) and Vero
Insurance have failed in their bid to get a declaratory judgment in their favour over fire levy
The Supreme Court announced this morning that it had unanimously allowed the NZ Fire Service Commission’s appeal on both issues and set aside the declarations made in the Court of Appeal and High Court.
The first of the two declarations referred to ‘split tier’ policies where an insured has cover for both a nominated indemnity sum and also excess of indemnity cover, which provides cover for the difference between the indemnity value of the property and the replacement value.
The Supreme Court found that the correct interpretation of section 48 (6) (c) required that the levy is payable on the true indemnity value of the property, as the sample policy provided insurance on terms more favourable than the indemnity value of the property.
“This better reflects the intention to set the levy to reflect the property owner’s level of insurance cover, and an interpretive approach favouring greater universality of the levy, which is in the nature of a tax for a public service,” the judgment summary said.
The second of the declarations related to a material damage and business interruption policy entered into in 2008 by the NZ Ports Collective comprising eight port companies under which they obtained cover for ‘all insureds collectively’ in relation to fire damage.
Second respondent Vero
was the leading underwriter.
The NZFSC argued that it should be treated as eight separate policies, regardless of cases in the UK and Australia cited by the respondents, and the Supreme Court has found in their favour.
“This finding was based on a number of features of the policy, including the fact that there is no insured property owned jointly by the ports collective, nor a joint interest in any insured property, but rather there are eight port companies with separately insured interests in different property,” the judgment summary said.
“The policy also contained a provision to the effect that it was to be interpreted as if it had been issued separately to each port company.
“These features distinguished this case from the ones argued before the Court.”
No order for costs was made.
See next issue for comment from IBANZ