A matter of time
September 4, 2017
The High Court in New Zealand in Body Corporate 74246 & Ors v QBE Insurance (International) Limited and Allianz Australia Insurance Limited  NZHC 1473 recently considered when a day begins for an insurance policy where the policy in issue had no inception time specified.
At 4.35am on 4 September 2010, a building in Christchurch was damaged in an earthquake. QBE issued a material damage policy for the Building for the period
4 September 2009 at 4pm to 4 September 2010 at 4pm (the QBE Policy). The Body Corporate of the Building made a claim on the QBE Policy for the earthquake damage.
Allianz issued a material damage policy for the Building for the period 4 September 2010 to 4 September 2011 at 4pm (the Allianz Policy). No inception time was specified in the Allianz Policy.
QBE indemnified the Body Corporate for its claim in part, but argued that the Allianz policy had incepted at 12am (i.e. midnight) on 4 September 2010 and that accordingly, at the time of the earthquake (4:35am on 4 September 2010), there was double insurance. QBE joined Allianz as a third party to the proceeding and sought a 50% contribution to the amount it had paid to the Body Corporate.
Allianz argued that the Allianz Policy was not triggered because it was incepted at the time the QBE Policy expired, on 4pm on 4 September 2010.
The High Court held that the Allianz Policy incepted at 4pm on 4 September 2010.
The Court found that the clear intention of the parties, objectively assessed, was to obtain seamless, rather than overlapping cover.
Pertinent to the Court’s decision were the following factors:
- the evidence showed there was never any request for or suggestion of overlapping or double cover;
- the Allianz Policy included an ‘Other Insurance’ clause which indicated that neither party considered there to be any overlap between the policies;
- there was no litigation under the ‘Other Insurance’ clause in the Allianz Policy or the QBE Policy; and
- no claim was made on the Allianz Policy in relation to the earthquake.
Generally, insurers in Australia include an inception time in their policies. Accordingly this issue seems less likely to arise here. Interestingly, evidence was adduced in the trial that, in New Zealand, the industry practice in respect of the relevant class of policy is generally to specify only an expiry time for the policy and not an inception time, to avoid there being any gaps in cover.
Authored by Stephanie Young, Senior Associate, Melbourne
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