Anders & Kern UK Ltd (t/a Anders & Kern Presentation Systems) v CGU Insurance Plc (t/a Norwich Union Insurance)

An insurance policy may distinguish burglary cover from robbery cover. Theft falls within cover for violence or threat of violence only where the theft involved actual violence or a threat directed at an insured person or employee. A person’s reasonable fear, or a hypothetical risk if he remained, is insufficient. A condition precedent requiring attendance when an alarm is not fully operational is not displaced by an implied personal-danger term where the policy clearly allocates the risk. Nor does a clause permitting the insurer to agree otherwise require it to accept, or negotiate, a request that would materially increase the insured risk, particularly retrospectively after the loss. The insurer’s duty of good faith does not enlarge that obligation.

Anders & Kern, a wholesaler of audiovisual equipment, claimed under a theft insurance policy after its premises were burgled. The alarm system was not fully operational because a telephone line had been cut, and no responsible person or keyholder remained at the premises.

The High Court, sitting in the London Mercantile Court, dismissed the claim after finding breaches of conditions precedent in the intruder alarm clause. The insured appealed, arguing that the theft was covered as robbery involving a threat of violence, that the alarm conditions were subject to an implied personal-danger term, and that the insurer had unreasonably withheld consent to the managing director leaving the premises.

1. Appeal dismissed. The decision of HHJ Mackie QC was upheld.
2. The policy provided cover for two materially different risks. Clause A concerned theft involving forcible and violent entry or exit, namely burglary. Clause B concerned theft involving violence or threat of violence directed towards the insured, its partners, directors or employees. Clause B required actual violence or a threat directed at a person within the specified class. It did not extend to a theft occurring after an individual reasonably feared that violence might occur if he remained at the premises.
3. The intruder alarm condition applied to Clause A thefts, not Clause B thefts. The distinction was commercially coherent: the condition addressed the risk of unattended and unalarmed premises exposed to burglary, whereas robbery presupposed the presence of a person towards whom violence was directed or threatened.
4. The proposed implied personal-danger term could not be read into the policy. A term may be implied only to give effect to the parties’ mutual intention as reasonable people, including where necessary to make the contract workable or give it commercial efficacy. It cannot contradict an express term. The policy clearly allocated the risk of leaving premises unattended and unalarmed to the insured. The proposed term would materially extend the insurer’s risk beyond that allocation.
5. The words permitting the insurer to agree otherwise did not impose an obligation to accept, or negotiate, a request that materially increased the insured risk. The context was important. A request for a different arrangement that preserved the intended level of protection might raise a different question. The present request was retrospective and sought cover for a loss occurring after the risk had materially increased. The court did not determine the wider distinction between a duty to consider a request in good faith and a duty to consider it reasonably, but neither duty required acceptance of the material increase in risk.
6. Lord Justice Tuckey agreed that the policy’s wording and the continuing duty of good faith did not assist the insured. Lord Justice Buxton agreed with both judgments. The formal order was: appeal dismissed.

1. Court of Appeal (Civil Division) — On 28 November 2007, the appeal was dismissed.
2. High Court of Justice, Queen’s Bench Division, Mercantile Court — HHJ Mackie QC dismissed the insured’s claim under the policy after finding breaches of the intruder alarm conditions.