A moment in time
By Jerome Veldsman
QBE Insurance (International) v Allianz Australia Insurance, a decision of the New Zealand Court of Appeal on 5 July 2018, dealt with the question when exactly did a substituting short-term insurer go on risk.
The insured had insured an immovable property situated in Christchurch with QBE from “04/09/2009” to “4pm on 04/09/2010“. The insured’s broker informed QBE in August 2010 that the insured would not renew the policy, The broker then by email and telephone communications arranged new cover for the insured with Allianz from “04/09/2010” to “4pm on 04/09/2011“. The broker and Allianz did not mention at what time of day on of 4 September 2010 Allianz would go on risk.
At 4H35 in the morning of 4 September 2010 a major earthquake struck Christchurch, and caused significant damage to the property.
QBE accepted it was liable for the earthquake damage under its policy. However, QBE sought a 50% contribution from Allianz on the basis that at 4H35 in the morning of 4 September 2010 both insurers were on risk.
In a short judgment the Court of Appeal found against QBE. It held that it was immaterial that the broker and Allianz did not discuss a specific start time. Implicitly, what they did discuss and agree on was that the Allianz policy was to take over from the existing QBE policy on the expiry of the QBE policy, whatever time that might be.
The decision is perhaps consistent with usual practice and industry norms, but to be on the safe side a substituting insurer ought to specify the time of day on which it goes on risk. And the decision could have gone the other way had it been argued that in an abundance of caution the broker had arranged overlapping insurance for the transition day.