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

An insurance condition requiring premises to be attended or protected by a working alarm is construed in its contractual context. A reference to theft involving a threat of violence means a specific threat directed to an individual of which that person is aware, not merely a general risk of personal danger. Where the policy clearly allocates the risk of an unalarmed premises to the insured, no term will be implied relieving the insured from that allocation. A contractual power to agree otherwise is subject at least to an obligation to consider a request in good faith, by reference to the particular facts and without extraneous considerations. Clear and conventional alarm conditions may be incorporated through standard policy terms without special warning.

The claimant sought indemnity for stock stolen during a burglary at its warehouse. The insurer relied on an intruder alarm condition requiring the premises, while unattended, to be protected by an alarm in full operation or attended by a responsible person. The alarm’s telephone line had been deliberately cut before the burglary, and the managing director left the premises after taking other security measures.

The claimant argued that the theft involved a threat of violence, that terms should be implied concerning personal danger and the insurer’s agreement to relax the condition, and that the alarm condition had not been incorporated or required special notice. The central issues were the construction, implication and incorporation of the alarm condition.

1. Claim dismissed. Judgment was entered for the defendant insurer.
2. The exclusion from the intruder alarm condition for theft involving violence or threat of violence to specified individuals did not apply. In context, a threat meant words or conduct directed to the individual concerned and of which that person was aware. A general risk arising from leaving the premises unattended was insufficient.
3. No term was implied that a keyholder need not remain where personal danger existed or was reasonably perceived. The policy clearly allocated the risk: if the alarm requirements were not met, cover remained only if a responsible person attended. If that person left, the burglary risk was borne by the insured. The implied term would contradict the express allocation and was unnecessary for business efficacy.
4. The words permitting the insurer to agree otherwise in writing required the insurer, at least, to consider a request in good faith by reference to the facts giving rise to the claim and without extraneous considerations. Applying the approach in Gan v Tai Ping [2001] 1 Lloyd’s 667, the insurer had acted in good faith and had not breached that obligation. Even on a reasonableness test, refusal was not unreasonable. The claimant’s reasonable conduct did not make the insurer’s refusal unreasonable.
5. The alarm condition was incorporated. The policy was issued on standard terms, the Schedule identified the additional intruder alarm conditions, and the clause was clear and conventional. Although more prominent notice would have been desirable, the condition was not within the exceptional category requiring the form of notice discussed in J Spurling Ltd v Bradshaw [1956] 1 WLR 461.