This week’s decision not to give the insurers involved in the Crystal Imports case leave to appeal to the Supreme Court has been described as the ‘final nail in the coffin’ by former New Zealand Law Association president Craig Langstone.
Speaking to Insurance Business Langstone said it had been a tough argument to succeed with all along but people will know now for certain that the courts can’t go the other way.
“The fact that the insurers’ application for leave to appeal in the Supreme Court has been dismissed is the final nail in the coffin for insurers trying to avoid the impact of the ‘standard’ Reinstatement of Sum Insured clause commonly found in most insurance policies,” he said.
The Court of Appeal had earlier said that cover automatically reinstates from the date of the event which caused the loss.
The insurers tried to argue that cover only reinstated from the date on which payment is made by the insurer for a loss, despite the actual words used in the clause, Langstone said.
While the Supreme Court said that no point of principle arose and the case was not one of general commercial significance, Langstone said insurers might be inclined to disagree with the Supreme Court.
“In my experience the wording of that effect is the usual sort of clause that you see certainly in commercial policies.
“There are still plenty of them out there and people are still making claims so I would think it would be fairly significant. But it will be significant in the sense that now people know that the courts can’t go the other way.”
Langstone did note, however, that the New Zealand courts have yet to rule on another relatively common RSI clause which specifically says that cover automatically reinstates upon claim payment.
“Presumably that clause means what it says and so Crystal Imports is of no direct relevance to that type of clause,” he said.
The insurer involved in the Crystal Imports case, Lloyd’s, did not wish to comment to the media and was now moving to quantify the insured’s claim based on the Court of Appeal’s decision.
