Bankers Insurance Company Ltd. v South & Anor

An exclusion of liability for accidents involving motorised waterborne craft includes a jet ski when read in its ordinary context. An insured riding a jet ski has possession of it, so an accident during riding falls within the exclusion. Where policy wording defining the scope of cover is plain and intelligible, its fairness is not assessed under regulation 3(2) of the Unfair Terms in Consumer Contracts Regulations 1994. Prompt-notification clauses may be conditions precedent, but a term denying recovery irrespective of prejudice may be unfair and severable. The insured’s prolonged failure to notify was also sufficiently serious to defeat the claim, and there was no waiver or estoppel.

The claimant underwrote a travel insurance policy arranged for the first defendant. The first defendant was involved in a serious accident while riding a jet ski in Cyprus, after colliding with the second defendant. The claimant sought a declaration that the policy did not require it to indemnify the first defendant.

The policy provided personal-liability cover but excluded accidents involving mechanically propelled vehicles, aircraft, motorised waterborne craft or sailing vessels. It also required prompt written notification of incidents and immediate forwarding of legal documents. The central issues were whether a jet ski fell within the exclusion, whether the relevant terms were unfair under the Unfair Terms in Consumer Contracts Regulations 1994, and whether the notification provisions were conditions precedent.

1. Claim allowed. The claimant was not liable to indemnify the first defendant in respect of the accident.
2. The phrase “motorised waterborne craft” was to be given its ordinary natural meaning in the context of the policy. A jet ski was plainly within that description.
3. The exclusion was expressed in plain and intelligible language. Regulation 3(2) of the Unfair Terms in Consumer Contracts Regulations 1994 therefore prevented an assessment of its fairness. In any event, the exclusion was not unfair.
4. The reference to an accident involving the insured’s possession of a waterborne craft covered an accident occurring while the insured was using and riding the jet ski.
5. In the alternative, the policy’s notification and document-forwarding requirements were conditions precedent to the insurer’s liability. Such clauses protect investigation and subrogation opportunities.
6. A term denying recovery for every breach, even where the insurer suffered no prejudice, would be unfair. The unfair consequence could be severed, leaving the contract otherwise effective. On the evidence, however, the prolonged delay caused serious practical prejudice and demonstrated an intention not to claim. The breaches therefore defeated the claim.
7. The correspondence did not waive the conditions or establish an estoppel.