construction of policy

8/9/2019 Construction of Policy

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CONSTRUCTION OF POLICY

Introduction

Monetary Authority of Singapore (MAS) less involved with achieving a levelplaying eld for the parties and market forces are left to operate

o Does not prescribe standard or basic terms for insurance contracts

Unfair ontract !erms Act also does not come into playo S"# to $ e%cludes insurance contracts from its ambit

onsumer &rotection ('air !rading) Act # * does not apply totransactions regulated by +nsurance Act

o ,ut Amendment- e%tend application of &'!A to nancial products

and nancial services (which can arguably include insurancecontracts)

o .owever/ see M!+ policy

Ministry of !rade and +ndustry (M!+) * as a directive/ in relation to insurancecontracts/ it is proposed that a supplier of an insurance contract should notbe taken to have engaged in an unfair practice by reason only that thecontract includes-

o (a) terms that clearly dene or circumscribe the insured risk0 ando (b) terms that clearly dene or circumscribe the insurer1s liability

e"g" e%clusions of risks

o 2ationale- these are usual terms they are necessary in insurance

contracts because it determines the price of the insurance policy

.ence/ insured must turn to the courts for relief

Rationales and Objectives 3evel the playing eld

o +nsurer is usually more dominant than the layman insured

o +nsurer is also the one who has the power to draft the policy termso +nsured has little understanding of insurance contracts

4nsure a fair and 5ust result to at least full the reasons of the insured forbuying the insurance

Formalities

See '62MA!+67

UK:s"# 3AA 899$ re:uires all insurance contracts based on the occurrenceof a specied event to be in writing

S:s";#($) +A provides that all contracts of indemnity are not re:uired tobe in writing

o !"ce#tions t$at re%uire &ritin': Marine +nsurance (M+A)/ 3ife

+nsurance (+A s";#(#))/ Motor +nsurance

Rule: &erson/ literate or illiterate/ who signs a contract which is set out in a

language he is not familiar with or whose terms he may not understand isnonet$eless bound b( t$e terms of the contract (Soon Kok Tiang v DBSBank Ltd)

o PCC:&rinciple is of general application

duty of good faith will nota


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Rules o) Construction

Issue:Should the court look at the specic term in dispute and ignore therest of the document i"e" should the conte%t where a term is located in theagreement in=uence its construction

Rule:!he term has to be construed in the conte%t of the entire agreement/

and not in isolation apart from the rest of the agreement (Hamlyn) Rule- >ords must be given their plain/ ordinary meaning but in the conte%t

of the policy looked at as a whole and sub5ect to any special denitionscontained in the policy (Yeo Chee Swee)

o And sub5ect to any words that have ac:uired a special or technical

meaning as a result of usage in the trade

Rule:+f a contract is partly printed and partly written/ the written words areto be given greater weight as they represent the parties1 specic intention

o on=ict to be resolved in favour of written words (Robertson)o Makes sense since where there is amendments in writing/ the

amendments normally take precedent *istinctionbetween (8) ordinary word (c"f" technical?legal meaning)/ (#)

reasonably clear term/ () imprecise termo +,- Rule: >hen a policy uses an ordinary word/ the word was to be

given its plain and ordinary meaning (Leo Rapp) * warehouse @building rather than yard or compound

o +.- Rule: >hen the terms in an insurance policy are reasonably

clear/ the courts have a duty to give ehen a term has no precise or e%act meaning/ one has to

look at the conte%t of the policy to nd a meaning for the term(Thompson v E!ity)

.amlyn v rown Accidental +nsurance o 3td 8BC (UEA)

Shopowner dislocated cartilage of knee while stopping to pick up a marble

dropped by a child

Shopowner1s accident policy covered Fany bodily in5ury caused by violent/accidental/ e%ternal and visible meansG

.owever/ policy e%cluded in5ury arising from Fnatural disease or weakness/or e%haustion conse:uent upon diseaseG

+nsurer argued that this was not e%ternal because no one had pushed him.eld-Per Lo#es L0:

!he policy must be read in the way in which a person of ordinary

intelligence would read it/ and in construing this particular clause we mustnot conne our attention to that clause/ but must look to the whole of thepolicy

+n construing the word Fe%ternalG/ must bear in mind the other part of thepolicy which deals with matters internal

3ooking at the contrast between matters e%ternal and matters internal/ the

act of reaching after the marble and the wrench which accompanied thatact supplies the e%ternal cause

!valuation:


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+n the conte%t of the policy/ the term Fe%ternalG in the insured risk referredto an event which did not arise from an internal disease or weakness

7ote- construction cannot be pervertedif not unfair to the insurero ,ut if insurer wanted something/ it should be up to him to e%press it

in clear terms (H!ssain)&rovincial +nsurance o 3td v Heo hee Swee 8CB$ (M1sia')

Deceased died in road accident while riding a motorcycle

&olicy e%cluded- FDeath or disablement caused by or conse:uent uponparticipation in hunting/ mountaineering/ winter sports/ racing of any kind/polo/ football/ motorcycling or any form of diving in the seaG

+ssue was whether the word FmotorcyclingG in the e%ception relates to the

use of a motorcycle for any purpose or only to motorcycling undertaken aspart of some sporting activity

.eld-Per 1as$im Yeo# 2 Sani 0:

A policy of insurance is basically sub5ect to the same rules of constructionas any other written contract

!he words used in it must be given their #lain3 ordinar( meanin' but int$e conte"t o) t$e #olic( loo4ed at as a &$ole and subject to an(s#ecial de5nitions contained in t$e #olic(

Applying the ma%im nos"it!r a so"iisto the e%ception/ FmotorcyclingG musttherefore be motorcycling not undertaken in the ordinary sense butmotorcycling in some form of sports or e%hibition or competition

!valuation:

!he e%clusion was inherently ambiguous ambiguity interpreted against

the insurer ("ontrapro#erentem) Also/ insured took out accident policy if do not get cover from accident

arising from ordinary riding/ the policy would be absurd the insuredessentially gets nothing

2obertson v 'rench (8B)

Ship taken into possession by the Admiralty while it was o< the coast of 2ioIaneiro on suspicion that it was involved in smuggling activities

Ship1s insurance policy stated that the risk insured was to commence fromthe loading of the ship at any place along the coast of ,raJil

+nsurers contended that the policy never attached to the insured goodsbecause they were not loaded on board the ship at the coast of ,raJil but atthe ape of Kood .ope

.eld-Per Lord !llenborou'$ C0:

7o special rules of construction applicable to an insurance policy

An insurance policy was to be construed 5ust like any other contract *ordinary words used in the policy were to be given their plain and ordinarymeaning

>hen a contract was partly printed and partly written/ greater weight was

to be given to the written words


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hiew Swee hai v ,ritish American +nsurance o (M) Sdn ,hd 8CB9 (M1sia.)

+nsured took out life policy with insurer

&olicy provided that if the insured should/ by accidental means/ sustain theloss of one limb/ the insurers would pay the insured one half the amount ofinsurance payable at the time of such loss

3oss was dened as Fdismemberment by severance at or above the wrist orankle 5ointG

+nsured met with accident which resulted in a complete loss of the functionof his upper limb

Doctor advised a complete amputation of the said limb" +nsured declined"

+nsured argued that the hand was as good as amputated because for allpractical purposes there had been a total loss of its use

.eld-Per S$an4ar 0:

!he interpretation should be reasonable and any ambiguities should be

resolved against the person in whose favour the document has beenframed

>here the words of the policy are crystal clear/ the sanctity of the contractshould be upheld

A disabled limb is not the same thing as a severed limb

!he language of the policy is clear and unambiguous (particularly under the

heading F,asic Accidental Dismemberment ,enetG)

+ndeed/ the very purpose of providing for the meaning of loss of hands andfeet is to see that there is no doubt or confusion as to the meaning of therisk covered i"e" whether a limb has been lost or not

4ven the insured must concede that the limp arm serves a cosmeticpurpose * he simply cannot say that he has lost it because it is still therefor the whole world to see

3eo 2app 3td v Mclure 8CLL (UEA)

Stockists of nonferrous metals were insured against Floss or damage byburglary/ housebreaking/ theftN on stock of iron/ steel/ nonferrous metals/whilst in warehouse anywhere in the UEG

+nsured1s lorry was left at a depot with an enclosed compound surroundedby high brick walls and topped with barbed wires

3orry stolen by thieves who broke into the depot1s compound +ssue was the meaning of the term FwarehouseG

.eld-Per *evlin 0:

>hen an insurer used an ordinary word/ the word would be given its plainand ordinary meaning

!he term FwarehouseG in its plain and ordinary meaning referred to somesort of building and a depot or yard did not come within the meaning

6f course some yards may be 5ust as secure as a warehouse/ but that is notthe point

!he point is that in the ordinary way when 3loyd1s are insuring they do notknow where the good are going to be


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!hey have got to dene it in advance/ and in the ordinary way if the goodsare Fin warehouseG it o


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!hompson v 4:uity 'ire +nsurance o 8C8 (& from anada)

,uilding owner covered under a re insurance policy stipulating that theinsurers were not liable Ffor loss or damage occurring while gasoline isstored or kept in the building insuredG

'ire was caused by a small :uantity of gasoline in a stove which was being

used for cooking purposes 7o other gasoline was in the building

+nsurers contended that gasoline was being kept on the insured premises atthe time of the re

.eld-Per Lord 6acna'$ten:

!he words Fstored or keptG are common 4nglish words with no very preciseor e%act signication

!he e%pression as used in the contract seems to point to the presence of a

:uantity not inconsiderable and to import a notion of warehousing or

depositing for safe custody or keeping in stock for trading purposes DiOcult to give accurate denition of the meaning/ but when given a

concrete conte%t not to diOcult to say whether a particular thing is Fstoredor keptG

Some meaning must be given to the words Fstored or keptG/ and they musthave their ordinary meaning * the small :uantity of gasoline which was inthe stove for the purpose of consumption was not being Fstored or keptGwithin the meaning of the contract

!valuation:

+n construing the words/ account must be taken of the commercial conte%t

in which the words were used +n conte%t of domestic re insurance policy/ the term would be construed as

intending to prohibit the storage or keeping of gasoline for a commercialpurpose

*id t$e court 'ive t$e term 74e#t8 its #lain and ordinar( meanin'o PCCfeels that technically the court deviated from the ruleif its on

the premises/ it is FkeptG on the premiseso ,ut the decision is a good decision based on policy- if give literal

interpretation/ then most households will not be able to haveinsurance for re

!echnical and 3egal !erms

Rule: >hen a term used in policy is a legal term or a term which hasbecome a technical term of art the term is likely to be construed in its legalor technical sense (Bolands)

o an easily work against insured especially if term has both legal and

ordinary meaning that do not coincideo May cause hardship since insured totally unaware of the

legal?technical meaning

Rule:>here a term has no legal or technical meaning/ the court is entitledto give the term its plain and ordinary meaning (Heath)


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>hen insurer uses word in a technical sense/ word would be given itstechnical meaning to give ehile it was still daylight/ four men armed with revolvers entered the

bakery and held up the employees

!hey took away cash from the cashier1s oOce +nsurers contended that what took place constituted a FriotG in accordance

with its wellknown legal meaning in the criminal law

+nsured argued that the term FriotG in a burglary policy ought to be given itsplain and ordinary meaning to refer to a tumultuous disturbance of thepeace

.eld-Per 9iscount Finla(:

!here was a riot in the legal sense of the term

+f the legal sense of the word was not taken/ what then was the sense in

which the word was to be readQ 7o reason why the provision should apply only if the riot is a collateral

event during which the theft takes place/ and not apply to a riot one of theob5ects of which/ at all events/ was the actual committing of the theft

Per Lord 2t4inson:

2iot as used in this case means riot in the ordinary sense to nd anyother meaning to it would be to give it a diluted interpretation

Per Lord Summer:

+t is true that the uninstructed layman probably does not think/ inconnection with the word FriotG of such a scene as the present case

.ow he would describe it + know not/ but he probably thinks of something/ ifnot more pictures:ue at any rate more noisy

!here is however/ no warrant here for saying that/ when the proviso uses a

word which is emphatically a term of legal art/ it is to be conned/ in theinterpretation of the policy/ to circumstances which are only within popularnotions on the sub5ect/ but are not within the technical meaning of the word

See no reason why the word FriotG should not include its technical meaninghere as clearly as FburglaryG and FhousebreakingG do

7o ambiguity to attract the "ontra pro#erentem rule!valuation:

PCC:7o way a layman would know that a riot constituted such scenarios *hardship signicant


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T$is case $as been $i'$l( criticisedo +nconsistent with the approach that terms should be given their plain

and ordinary meaning

+n SK- rioting @ force?violence R unlawful assembly (L or more personsassembling for common ob5ect to commit any o


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Note: this was a reinsurance contract * between reinsurer and insurer/both have e:ual knowledge and legal advice should know what theywere getting into by using Fcivil commotionG

F!heftG

Criminal la& is relevant in inter#retin' terms li4e 7t$e)t8 (Lake) 7ote- if there is a legal term used/ 5ust because there is an ordinary

meaning does not mean there is ambiguity therefore attracting the &2its 5ust two people understanding the word di


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embeJJlement/ burglary/ accident/ or abstraction/ or taken out of theirpossession or control by any fraudulent meansG

lient paid for shares purchased with a che:ue which was dishonoured

lient disposed o< the shares and was found dead in the sea

+nsurers contended that the insured was cheated by their client and thisrisk was not covered by the policy

.eld-Per ali$ac$e 0:

>hen property was obtained by means of a worthless che:ue/ the eventconstituted a theft of the property because a layman would consider theproperty to have been stolen or lost by theft

!he loss was the result of a theft or a loss by fraudulent means


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3im !rading o v Sinclair 8C;9 (SK.)

Stockbrokers1 insurance policy covered the risks of loss by robbery/ theft/re/ e%plosion/ burglary or abstraction

lient bought shares worth T;Ck using three che:ues which were later

dishonoured

+nsurers contended that there was no loss by theft but the insured wereswindled by their client and under UE law the client would have been guiltyof obtaining the shares by false pretences

.eld-Per uttrose 0:

+n essence the transaction was one of obtaining the shares by falsepretences and not by theft within the meaning of the policy

Under UE law it would be regarded and punished as false pretences andunder SK law as cheating and in neither case as theft within the meaning ofthe policy or in the fullest sense of the term itself

!valuation: PCC: !his case is probably rightly decided/ while 'awle was wrongly

decided

7aJa Motor !rading Sdn ,hd v Malaysian Motor +nsurance &ool #88 (M1siaA)

&f was car dealer/ and had procured from the Df (insurer) a policy ofinsurance providing cover for/ inter alia/ loss of vehicle by theft

During the currency of the said policy a vehicle/ while being testdriven by

a potential driver/ was stolen/ presumably by the said potential buyer as hehad vanished with the car on the day it was testdriven

&f1s claim for the loss of the motorcar was re5ected by the Df * repudiatedliability solely on the e%clusion cl" , of the policy/ namely the loss was dueto cheating and not theft

+ssue was whether the events leading to the loss of the car constituted theft

or cheating.eld-Per 6o$amed 2#andi 2li 0C2:

>here the term FtheftG is used and although not dened in the policy/ suchterm is to be construed as dened in the &enal ode

!heft under the &enal ode is F>hoever/ intending to take dishonestly any

movable property out of the possession of any person without that person1sconsent/ moves that property in order to such taking/ is said to committheftG

+t is clear that the purported potential purchaser of the motorcar did takeout of the possession of the said motorcar which was then in the possessionof the &f1s salesman and it was done dishonestly and without the consent ofthe salesman

Such loss of the motorcar was therefore a result of a theft

annot t the facts of the present case into the provision of FcheatingGunder the &enal ode

7ote facts of Lakeamount to theft


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'urthermore/ the intention and purpose of the insurance policy is to providecoverage for loss of vehicle during testdriving by potential customers

7o valid reason for the salesman to doubt the potential customer


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>ong Eon &oh v 7ew +ndia Assurance o 3td 8C9 (M1siaA)

Motorcycle was insured against loss by burglary/ housebreaking or theft

+nsured was robbed by $ persons of TL and his motorcycle

+nsurers contended that what took place constituted a FrobberyG and not aFtheftG and that robbery was not an insured risk

.eld-Per On' C0:

!he risks insured under the policy should not be given a technicalconstruction as the insurers had used terms like FburglaryG which had notechnical meaning in M1sia

o Since burglary had no technical meaning/ FtheftG when used in

5u%taposition to burglary and housebreaking need not be construed inthe strict technical sense against the insured

!he risk of theft also covered the risk of robbery

2obbery was merely an aggravated form of theft

+f the insurer wants to e%clude for robbery/ that it is up to them to state soin the plainest of terms

+n any case/ it would be against commonsense and a denial of 5ustice todeny the a%iomatic truth that Frobbery is an aggravated form of theftG

3oss by robbery is no more preventable by any precaution on the part of

the insured than in the case of theft * the risk cannot be considered to bediestern 8C$ (UEA)

89y?o boy driving his father1s car

involved in serious accident in which awoman was killed/ several persons in5ured and cars damaged


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!he in5ured included the boy1s sister/ travelling as a passenger

+nsurance policy covering the driver e"cluded liabilit(for FDeath or in5uryto any member of the assured1s household who is being carried inN the carotherwise than by reason of or in pursuance of a contract of employment"G

+nsurers argued that the sister was not covered because she was a memberof the driver1s household

Driver argued that the term Fany member of the assured1s householdG

should be restricted an assured himself who has controlled or was the headof a household

o Driver was not a householder/ but was living in his father1s house/

hence e%ception does not apply.eld-Per Slesser L0:

T$ese &ords are e%uivocal and are e%uall( ca#able o) eit$er

construction

+f the words be e:uivocal or ambiguous/ the doctrine known as "ontrapro#rentesshould here be applied

+f there is any ambiguity in the language used in a policy/ it is to beconstrued more strongly against the party who prepared it

!he insurers are not entitled to adopt that favourable construction (that thesister was a member of the driver1s household) in order to e%clude aconstruction which is said by the &f to be the proper construction

Per oddard L0 +dissentin'-:

+t is true that the words Fthe assured1s householdG can be construed in oneof two ways

+t is also true that where you nd a proviso inserted in an insurance policyfor the benet of the underwriters you are/ if the words are ambiguous ornot clear/ to construe those words more strongly against the underwritersthan against the assured

,ut this doctrine is limited in this way * if there is a perfectly good reason

for adopting one construction/ and no reason/ or very little reason/ forconstruing the clause in the other way/ the construction which a


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!o construe it in the way contended for by the assured/ seems to me to leadto the curious result that if the father has a car and the son has a car/ andeach are insured by separate policies/ the son gets a far wider cover thanthe father would get

!valuation:

FAssured1s householdG * can be interpreted according to the commercialpurpose of the policy


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.oughton v !rafalgar +nsurance o 3td 8CL$ (UEA)

ar carrying si% people became a total loss when it was involved in anaccident

ehicle1s insurance policy e%cluded liability for F3oss/ damage and?or

liability caused or arising whilst any such car is engaged in racing/ pace

making/ in any reliability trials/ speed testing or is conveying any load ine%cess of that for which it was constructed

+nsurer contended that insured vehicle was carrying a load in e%cess of thatfor which the vehicle was constructed

.eldPer Somervell L0:

+f there is any ambiguity/ it will be resolved in favour of the assured

!he words relied on Fany load in e%cess of that for which it wasconstructedG only clearly cover cases where there is a weight load speciedin respect of the motorvehicle/ be it lorry or van

o Unsure whether it applies to motorcars but unnecessary to decide so >e have to construe the words in their ordinary meaning/ and the words

only clearly cover the case which + have put

+t would re:uire the plainest words possible if it were desired to e%clude

insurance cover by reason of the fact that there was at the back onepassenger more than the seating accommodation

Per Romer L0:

7o idea what the term means when applied to a private motorcar!valuation:

!he e%clusion was not only ambiguous/ it &as also ina#t (not suited)

when applied to a passengercarrying vehicle ourts did not e%actly apply "ontra pro#erentemrule per se did not give

a meaning to the term simply re5ected the term as applying to thepresent scenario

o 7Load8 did not refer to passengers

entral 3orry Service o Sdn ,hd v American +nsurance o 8CB8 (M1sia.)

ommon carrier transporting goods from E3 to Muar lost the goods whenthe nearside wooden =ap of the lorry gave way and goods amounting toT8$k fell from the lorry and were stolen

+nsurers contended that the loss did not come within the policy because itonly covered a loss Fwhilst in ordinary or customary course of transit/occasioned by the carrying vehicle or conveyance being on re/ derailed/overturned or in collision/ struck by lightning or other accident to thevehicle or conveyance as involuntarily leaving the road/ breakdown ofbridges and conse:uent damage to the conveyance or vehicle and theinterest assured herebyG

+nsurer contended that the loss was not due to insured vehicle involuntarilyleaving the road or by the breakdown of bridges

.eld-Per 2


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!here is doubt and ambiguity in the clause as to whether the policy coversany accident to the vehicle or is merely conned to accidents cased by thevehicle involuntarily leaving the road or by breakdown of bridges

+n construing insurance policies the "ontra pro#erentemrule should apply if

there was ambiguity or doubt as to the e%tent of the policy" Such doubts will

be resolved against the insurer !he policy in this case covered all accidents to the vehicle and the two

events described in the clause were mere e"am#les and not e"$austive

!"am#les o) Common Terms and T$eir Construction

Accident

Rule: Accident connotes an event happening une%pectedly or fortuitously

(which is what is re:uired for an insurance contract * une%pected event)(+ills)

Rule:4vent must be e%ternal to the insured i"e" distinction between eventthat caused the in5ury and the in5ury itself in5ury itself cannot be anaccident (D-T)

o !he event causing the in5ury must be une%pected/ not the in5ury itself

to be une%pected (Brinton)

Rule: +f an insured takes a calculated risk/ damage or in5ury resulting fromthe occurrence of the risk cannot be attributed to an accident even thoughthe insured may not have deliberately or consciously intended the damageor in5ury (Dhak v (ns!ran"e o# )orth .meri"a /$K0)

o 4"g" ingest large amounts of alcohol/ become so into%icated that you

su


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&resently/ although the foundations of the &f1s house might have settledgradually/ there had been a moment when the overstepping of the safetylimits of movement had caused a fracture of the foundations

!he cause of that overstepping was the nuisance of the roots of the tree

draining away the moisture necessary to keep the movement of the house

within the safety limit !herefore the damage to the &f1s house was caused Fby accidentG

An analogy could be drawn from the cases decided under the >orkmen1sompensation Acts where an in5ury suorkmen1s ompensation Acts

;arsa& Convention ,=.=

2e Deep ein !hrombosis and Air !ravel Kroup 3itigation #; (UE.3) Action was brought by LL passengers or their personal representatives

against #8 international air carriers under Art 89 of the >arsaw onvention8C#C

laimants alleged that they su


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D! sustained during the course of or arising out of international carriageby air was incapable of being an FaccidentG causing bodily in5ury within themeaning of article 89

;or4 Injur( Com#ensation 2ct

Per$a#s can use 7accident8 $ere as an analo'( to inter#ret&$et$er an 7accident8 $as occurred under insurance #olicies

o 7ote- +ills refer to >orkmen1s ompensation Act because thewording used in the policy was e%actly the same as the Act

o Cannot use )or #ersonal accident #olicies>

FAccidentG is construed to cover an in5ury arising from a workman1se%ertion in carrying out his work (&olden Hope)

o 4:ually/ if a workman is su


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!valuation:

3ikewise/ under personal accident policy/ unlikely for someone to be able tomake a claim under the policy for catching a cold?disease at the work place

Construin' Personal 2ccident Policies

(8) !here must be an accident (#) Amount of indemnity recoverable often dictated by whether in5ury-

o +s of a temporary or permanent natureo Aholesale grocer insured under personal accident policy

,usiness re:uired him to drive all over the country to secure supplies forsale at markets and stalls

+nsured became totally disabled after a serious road accident on Mar ;/8CL9

'rom the time of accident until Iun ;/ 8CLB/ the insured could not undertakeany work of a wageearning nature

+nsurance policy provided di


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A person could not be said to attend to business simply because he wascapable of doing * perhaps rather badly * some minor part of the workinvolved in that or any other business

+nsurer was entitled to the higher rate of payment up to Iun 8CLB/ as he

was su


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Any other occupation would/ needless to say/ be out of the :uestionbecause the continual twitching and =apping of his right upper limb wouldclearly prevent him from concentrating on any 5ob he might be engaged in"

Sargent v K24 (UE) 3td # (UEA)

+nsured has personal accident policy +nsured was a former corporal in the Army

.e left the 'orces to train as a dry line 5ointer/ a semiskilled occupation

.is right inde% nger was severely in5ured on the football eld and had tobe amputated

'ollowing the amputation/ he was unable to continue in his occupation as adry line 5ointer

.owever/ he was able to do other labouring work and could drive heavygoods vehicles

,enets provided under policy included F&ermanent total disablement from

attending to any occupationN 8kG

+nsurers paid him 9L for the loss of his inde% nger but refused to pay forpermanent total disablement

.eld-Per 6ummer( L0:

!he e%pression Fany occupationG was ambiguous

4ach of the con=icting positions could legitimately be commended by itsproponent as literally sustainable and stigmatised by its opponent aspatently absurd

A broader approach to construction was appropriate/ embracing

consideration of the policy as a whole/ its conte%t/ scheme and surroundingcircumstances

+f there was an ambiguity in the policy terms/ it would be construed againstthe insurers

>hen an insured was unable to continue in the particular occupation he

was previously engaged after sustaining an in5ury he was entitled topayment for a permanent total disablement

Another term in the policy stated that 8k payable for any member whowas disabled from following his own or an alternative occupation within the'orces

!he relevant term stated that an insured who was not a member of the'orces was entitled to 8k if he was permanently disabled from attendingto any occupation

!he evident purpose of personal accident insurance against permanentdisablement of a person/ who was not in the special position of a memberof the 'orce/ was to provide for the event that he was permanently disabledfrom attending to his occupation as at the time of the disabling in5ury andnot 5ust to provide for the more drastic and remote event that he would notbe able to attend to any occupation of any kind ever again

McKeown v Direct !ravel +nsurance #$ (UEA) .ealthy and t housewife with children went on holiday in !urkey


24/28

She obtained travel insurance for the trip

&olicy benets in the event of FA permanent physical disability whichprevents you from doing any paid work (if you are not in paid work/ we willprovide the same cover for any permanent disability which prevents youfrom doing all your usual activities) * LkG

+nsured was in5ured in road traOc accident

Su


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normal occupation/ if he had had one at the time of the accident/ or onesimilar to it

Insurer ma( insure a'ainst loss o) $is e(es or #art o) $is e(e" +f these risksare separately insured/ a policyholder may be able to claim for two or more

separate losses sub5ect to the limits of the policy!ay 4ng huan v Ace +nsurance 3td #B (SKA)

&ersonal accident policy provided an insured benets for F(8) !otal 3oss ofNSight in 6ne 4ye LV and (#) !otal 3oss of 3ens in 6ne 4ye LVG

+nsured in5ured his left eye when a wire mesh he was carrying struck hiseye

.e underwent an emergency operation for lacerations to his cornea and irisand traumatic cataract in the eye

+nsured later had a further operation to remove the lens in his left eye

+nsurers paid Tk for loss of the lens

+nsured claimed further payment for the loss of sight in the eye since theaccident left the eye FnonfunctionalG and Fblind by >.6 denitionG

+nsurer1s contended that recovery for loss of sight @ double recovery.eld-Per C$an Se4 Keon' C0:

!he benet payable in respect of the total loss of sight in one eye is

categorised di


26/28


27/28

Iohn A &ike (,utchers) 3td v +ndependent +nsurance o 3td 8CCB (UEA)

>holesale butchers operated from a building surrounded on three sides bya yard and =anked on each side by sets of double gates which werechained with padlocks when they were closed for business

!hieves made away with close to 8Lk worth of froJen meat from the

premises !he thieves forced open the padlock at the gates to gain access into the

yard

!hey then entered the building by a side door" !his door was not forcedopen but the lock might have been picked

!hieves then made their way to an entrance lobby where they forced openan internal door leading to the workshop

!hey also forced open the door to the cold store from where they stole the

meat

,utchers were insured under a commercial combined policy covering the

risk of Ftheft (or any attempt threat) involving entry to or e%ist from the&remises by forcible and violent meansG

+nsurers contended that there was no forcible entry into the insuredpremises and such entry did not include forcible entry into the yard

.eld-Per !vans L0:

!he clause referred simply to Fthe premisesG

>ithout e%press e%clusion of the yard etc/ it would be clear that Fthe

premisesG meant the whole of the property occupied by the &f and thatincluded the yard

72ll Ris4s8 Polic(

>hen good are insured against Fall risksG/ the policy covers any fortuitousdamage to the goods provided the damage is not caused by thepolicyholder1s deliberate conduct or due to inherent vice or wear and tearof the goods (Leong Brothers (nd!stries)

FAll risksG polices may be issued sub5ect to limitations imposed by the

insurer (Siang Hoa)o Wuery- whether it is reasonable for a layman to think that an Fall

risksG policy is not sub5ect to any limitations if there are limitations/

how is it an Fall risksG anymore

Siang .oa Koldsmith &te 3td v !he >ing 6n 'ire P Marine +nsurance o 3td 8CCB(SKA)

+nsured who traded in gold 5ewellery was covered under an all risks policyagainst Floss or damage arising from any cause whatsoeverG

&olicy e%cluded Floss or damage caused by fraud/ dishonesty or dishonestdeception committed by any customerG

'raudster from US ordered UST##k worth of 5ewellery after placing a 8Vdeposit

'raudster submitted a forged banker1s letter of indemnity to obtain deliveryof the 5ewellery in Miami


28/28

.e disappeared with the 5ewellery

+nsurers contended that loss was caused by customer1s dishonesty.eld-Per Lai Ke& C$ai 0:

!he policy was an all risks policy/ but this did not in fact mean that allpossible risks/ both foreseeable and unforeseeable/ were covered under thepolicy

All risk cover does not mean cover literally against all risks

'irst/ there is a practical limit to those risks to which the particular sub5ectmatter in its particular location is e%posed0 limits on the range of risks areusually built in to the risk situation

Second/ there is usually a contractual limit- an all risks policy usuallycontains an e%press e%ception to particular risks

!hird/ there is a conceptual limit0 4nglish law imposes limits as part of thedenition of all risks cover" !hese limits/ which are sometimes called

implied e%ceptions/ are that loss must be fortuitous/ and lawful to insure +n determining the precise ambit of an all risks policy/ one must rst have

regard to the terms and conditions contained within the policy and theconstruction of those terms and conditions thereof

+t is wrong to assume that all risks meant literally all and any risks withoutany regard to the policy itself

6n a true construction of the policy/ it being an all risks policy/ we think

there was clearly a territorial limit of within Singaporeo >hen the policy was rst e%ecuted/ it did not apply to any event

which occurred outside Singapore" !he policy was limited

contractually to the e%tent that it did not cover losses other thanlosses within Singapore

o !he alleged fraud occurred only after the goods had landed safely in

Miami/ and not while it was in transit from Singapore to Miami" !hiswas not covered by the policy

'urthermore/ a loss is covered by an all risks policy if there is somethingaccidental and fortuitous which can be described as a casualty

o +t seemed to us that the &f1s voluntary shipment of the goods by air/

which was intended for delivery against payment (which in the eventdid not take place because of the fraud of the buyer) was

incompatible with the suggestion that the goods had been lost" 'urther/ the present situation was one of fraud and fell within the e%ception

construction of policy

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