Insufficiency of packing exclusion (Institute Cargo Clauses)
The Institute Cargo Clauses (“ICC”) are a set of standard marine cargo clauses maintained by the Joint Cargo Committee. The latest iteration of these clauses, the ICC 1/1/2009, offers three levels of cover in descending scope of protection: ICC ‘A’ (all-risks), ICC ‘B’ (named perils, broader), and ICC ‘C’ (named perils, narrower).
All three levels of cover are subject to a common set of excluded perils. One commonly encountered exclusion is clause 4.3 of the ICC 1/1/2009 (“the Packing Exclusion”), which excludes:
“… loss damage or expense caused by insufficiency or unsuitability of packing or preparation of the subject matter insured to withstand the ordinary incidents of the insured transit where such packing or preparation is carried out by the Assured or their employees or prior to the attachment of this insurance (for the purpose of these Clauses "packing" shall be deemed to include stowage in a container and "employees" shall not include independent contractors)”.
Where an insurer purports to decline cover in reliance on this exclusion, it is important for a policyholder to closely examine the insurer’s reasons for doing so. In every case, the burden falls on the insurer to prove that the loss was proximately caused by the excluded peril (i.e., the insufficiency of packing). This requires the insurer to show that:
- The packing or preparation of the subject matter insured was insufficient or unsuitable to withstand the ordinary incidents of the insured transit;
- The insufficiency or unsuitability of the packing or preparation was the proximate cause of the loss or damage;
- The packing or preparation was carried out by the assured or their employees; and
- The packing of preparation was carried out prior to the attachment of the insurance.
Each of these elements is considered below.
- The packing or preparation of the subject matter insured was insufficient or unsuitable to withstand the ordinary incidents of the insured transit
‘Packing’ and ‘preparation’ refer to those steps necessary to prepare the cargo for the loading process. ‘Packing’ generally encompasses the placing of an outer covering over the cargo or the placing of the cargo in a container, but may at times include the insertion of material into the cargo to protect internal components. ‘Preparation’ generally involves other acts that may be necessary to prepare the cargo for loading, for instance the removal or adjustment of mechanical parts.
In no case would ‘packing’ or ‘preparation’ refer to the very acts resulting in the cargo being loaded on board. Thus in The Icebird [1991] LMLN 312, the Supreme Court of Victoria held that the failure to properly secure helicopters in the hold of the vessel could not be considered an act of ‘packing’ or ‘preparation’.
The phrase ‘the ordinary incidents of the insured transit’ has not been considered in any reported judgment relating to the ICC. A leading textbook suggests that this phrase should be read broadly to impose a ‘a rigorous requirement for packing’. On this reasoning, ‘ordinary incidents’ would refer to all reasonably foreseeable circumstances of the insured transit. Thus, if the packing of cargo was insufficient to withstand foreseeably rough sea conditions such as sudden high winds, the exclusion would apply.
That said, the formula ‘the ordinary incidents of the insured transit’ closely mirrors the classic definition of inherent vice set out in Soya v White [1983] 1 Lloyd’s Rep 122, namely:
“the risk of deterioration of the goods shipped as a result of their natural behaviour in the ordinary course of the contemplated voyage without the intervention of any fortuitous external accident or casualty”.
The phrase ‘the ordinary course of the contemplated voyage’ has been ascribed a narrow meaning in the context of inherent vice. The UK Supreme Court has held that the phrase does not encompass all reasonably foreseeable weather conditions on a voyage, but instead stands as a counterpoint to voyages on which a fortuitous external accident or casualty did occur. In other words, loss or damage involving the intervention of a fortuitous external accident or casualty would not be regarded as taking place in the ‘ordinary course of the contemplated voyage’: see The Cendor MOPU [2011] UKSC 5. There is scope, therefore, for arguing that the ‘ordinary incidents of the insured transit’ should be understood in a similarly narrow fashion and that, where insufficiency of packaging is being relied upon by insurers to decline cover, a careful examination of the circumstances leading up to the loss should be carried out.
- The proximate cause of the loss or damage was the insufficiency of the packing or preparation to withstand the ordinary incidents of the insured transit
The onus falls on the insurer to prove that the insufficiency of packing was the proximate, i.e. the dominant, cause of the loss. This need not necessarily be the cause that was closest in time to the loss.
As a practical matter, a policyholder should consider whether some other cause was dominant. This might include, for example, extraordinary weather conditions (including temperature) or sea states, or unforeseeable delays. Ultimately the cause of a loss is a question of fact and policyholders with complex losses with multiple factors at play should seek the assistance of experts.
- The packing or preparation was carried out by the Assured or their employees
The Packing Exclusion only applies where the packing or preparation was carried out by the policyholder’s employees, rather than an independent contractor, and a policyholder should always consider this distinction.
It has been suggested that the rationale for the distinction is that insurers potentially have a right of subrogation against an independent contractor who carried out the packing or preparation, and may therefore be more willing to accept the risk of insufficient packing in that situation.
- The packing or preparation was carried out prior to the attachment of the insurance.
The Packing Exclusion only applies where the allegedly insufficient or unsuitable packaging was carried out “prior to the attachment of this insurance”. The time of attachment is governed by clause 8.1 of the ICC 1/1/2009, the first paragraph of which provides:
“[the] insurance attaches from the time the subject-matter insured is first moved in the warehouse or at the place of storage (at the place named in the contract of insurance) for the purpose of the immediate loading into or onto the carrying vehicle or other conveyance for the commencement of transit …”
Cover under a policy subject to the ICC clauses attaches when the cargo is moved for ‘immediate loading’ onto the carrying vehicle. ‘Immediate’ in this context means as quickly as possible, without any unreasonable delay. As such, where goods are moved, albeit not for the purposes of the immediate loading (e.g. when cargo is moved into a holding area but loading onto the carrying vehicle only takes place several days later), it would be difficult to establish that the policy had attached at the time the cargo was moved into the holding area.
If the process of loading the cargo onto the carrying vehicle consists of several discrete steps taken in close succession, at which step would the insurance attach? Usefully for policyholders, case law suggests that the policy would attach when the first (rather than the last) of these steps is taken.
Thus in Swashplate v Liberty Mutual [2020] FCA 15, (i) a helicopter was moved out of a hangar and loaded into a container where it was secured, and (ii) the container was then loaded onto the carrying truck two hours later. The helicopter was damaged during transit as it had not been secured properly in the container. Insurers attempted to argue that the policy attached only when the container was loaded onto the truck. However, the Federal Court of Australia commented in obiter that the requirement for immediacy was satisfied once the helicopter was moved out of the hangar, and that the policy attached at that point. Since the error in securing the helicopter took place after the policy attached, the insurers could not rely on the Packing Exclusion.
Conclusion
Although we commonly see insurers seeking to decline cover on the basis of the Packing Exclusion, whether they are entitled to do so is often far from straightforward.
For example, we were recently consulted on behalf of a policyholder with a claim arising from molasses that had been packed into flexibags, which were then loaded on to shipping containers. The flexibags did not have automatic air vents and ended up bulging after being exposed to certain ‘extreme circumstances’ (namely, unusually high temperatures) while in transit. It was questionable whether the Packing Exclusion was truly applicable, since the damage arguably was not caused by the ‘insufficiency or unsuitability of packing … to withstand the ordinary incidents of the insured transit’.
In short, for the Packing Exclusion to apply, the facts of the case must always fall within the four requirements identified above. A policyholder should thus closely scrutinise a declinature which relies on the Packing Exclusion and consider if the insurer has genuinely satisfied these requirements.
Authors
Toby Nabarro, Director, Singapore
Win for policyholder in triple insurance case
Watford Community Housing Trust v Arthur J Gallagher Insurance Brokers Limited [2025] EWHC 743 (Comm)
In a judgment favourable to policyholders delivered on 8 April 2025, the Commercial Court upheld a policyholder’s right to choose on which policy to claim where cover was provided under multiple policies. The Court also confirmed that, where insufficient cover is provided by an individual policy, the policyholder may claim sequentially under two or more policies.
Background
The Claimant was responsible for a serious data breach, the financial consequences of which were covered under three separate insurance policies arranged by the Defendant broker (a Cyber Policy, a Combined Policy, and a PI Policy, which contained indemnity limits of £1m, £5m and £5m respectively).
Each Policy contained an ‘Other Insurance’ clause, which provided that, where multiple policies covered the same loss, the Policy would only cover losses in excess of those covered by the other policy.
Following the breach, and on the Broker’s advice, the Claimant notified the Cyber Insurer but not the Combined or PI Insurers, resulting in late notification. The Combined Insurer eventually affirmed cover despite this; but the PI Insurer maintained a declinature, and it was common ground that it had been entitled to do so. As a result, the Claimant had £6m of available cover under the Cyber and Combined Policies.
The Broker subsequently accepted that its advice had been negligent.
As its losses arising from the data breach exceeded the £6m of available cover, the Claimant sued the Broker, alleging that but for its negligence, the Claimant would have been entitled to a total indemnity of £11m (being the sum of the indemnity limits of all three policies).
The Broker’s position
The Broker argued that the maximum total indemnity to which the Claimant would have been entitled, even absent its Broker’s negligence, was the maximum liability under any one Policy, i.e. £5m. The Broker further argued that, since the Policyholder had already received £6m from the Cyber and Combined Policies, it had suffered no loss in not being covered under the PI Policy, as it had already recovered more than the maximum indemnity to which it would have been entitled.
In support of its case that the maximum recoverable indemnity was only £5m, the Broker submitted, and the Court accepted, that the ‘Other Insurance’ clauses in each of the Policies all cancelled out one another. Accordingly, argued the Broker, this was a case of triple insurance where the Policies provided primary cover for £1m, £5m and £5m respectively.
The Broker then argued that. in such a case of triple insurance, a general principle of ratable contribution applied, such that the maximum indemnity to which the Claimant was entitled was the maximum liability under any one policy. As a result, each Insurer’s liability would be limited to an equitable proportion of that capped liability. For example in the current situation, the Cyber, Combined and PI insurers would each be liable for one-third of the first £1m of the Claimant’s loss, and (ii) the Combined and PI insurers would each be liable for one-half of the next £4m of the Claimant’s loss, such that the Claimant would be entitled to £333,333, £2,333,333 and £2,333,333 from the Cyber, Combined and PI Insurers respectively - ie, a total of £5m.
In addition, the Broker had an alternative argument that, since the Policies were worded such that none of the insurers had agreed to provide primary coverage when another primary policy existed, effect should be given to that intention, by limiting the total indemnity available to the maximum indemnity under any one policy, thus reducing each individual insurer’s liability.
Decision
In finding for the Claimant, the court held that, contrary to the Broker’s principal submission (which the court said had been mistakenly based on cases involving claims between insurers) ,there was no general principle of rateable contribution in cases involving double (or triple) insurance whereby a policyholder’s indemnity was capped at the highest limit of any one policy. Further, the policyholder could choose the order in which to claim under the available policies, and, if it failed to recover the whole loss from one, it could recover the balance from the other(s). It would then be a matter for the insurers to establish contribution between themselves.
In addressing the Broker’s alternative argument that the wording of the policies operated to restrict the total indemnity to the highest single limit, the Court accepted that the general proposition that the wording of the policies could have displaced the usual rule outlined above, but held that, as a matter of construction, that was not the effect here.
As the Judge explained:
“It seems to me that if an insured has paid more than one premium for more than one primary policy against liability incurred above a specified attachment point and up to a specified limit, absent an express contractual provision that provides otherwise, as a matter of general principle the insured should be able to recover the whole of its loss under one or more of the policies up to a maximum of the combined limits. Contribution, if it arises, is a matter for the insurers inter se and absent a rateable proportion clause in the policy is of no concern to the insured”.
The Broker was therefore liable for the Claimant’s losses which subsisted after payment by the Cyber and Combined Policies, subject to the limit of indemnity under the PI Policy.
The full judgment can be read here:
https://www.bailii.org/ew/cases/EWHC/Comm/2025/743.pdf
Authors
Matthew King, Associate (Foreign Qualified Lawyer)
Arbitration Act 2025 – What policyholders can expect
In the biggest legislative development in the field of arbitration in England for thirty years, the English Arbitration Bill received Royal Assent on 24 February 2025 and was enacted as the Arbitration Act 2025 (the Act). The date on which the Act will come into force is to be determined, but the Government has indicated that this will be “as soon as practicable”.
Rather than replacing the existing statutory framework, the Act amends and adds to the Arbitration Act 1996.
The intention of the Act is to reinforce England’s position as the best place to resolve disputes by arbitration. We consider below how the developments may affect policyholders.
Power to make award on summary basis
The Act codifies the power under which an arbitral tribunal may make a summary award in relation to a claim or issue if the tribunal considers that a party has “no real prospect of succeeding”. This brings welcome clarity, the previous position as to whether a tribunal had such power being uncertain.
This will not markedly change practice for parties used to arbitrating disputes under the LCIA rules, which have previously provided that a tribunal may find a claim is (i) inadmissible; (ii) manifestly without merit; or (iii) manifestly outside the jurisdiction of the tribunal. This change will therefore have the greatest impact on parties arbitrating under ad hoc rules, and offers those parties an opportunity to save time and resources when faced with unmeritorious claims or unmeritorious defences.
Applicable law
Previously, the common law has provided that the law governing an arbitration agreement will be determined by the law governing the underlying contract, unless otherwise provided.
The new approach under the Act provides that, absent express agreement, the law of the seat of the arbitration shall apply, and an express choice of law governing the underlying contract will not constitute an express choice in relation to the arbitration agreement.
While this may seem to lay observers like a technical point, the change in approach is significant. The previous (and criticised) position meant that parties to a non-English law contract, but with a London-seated arbitration agreement (which did not specify the law applying to the arbitration agreement), found that the arbitration agreement was not governed by English law. Parties would therefore not benefit from the full protection and support of English law, which generally seeks to uphold references to arbitration.
Jurisdictional challenges
The Act limits the scope to challenge an award on jurisdictional grounds such that the court will not hear objections which have not been first raised with the arbitral tribunal, or consider evidence that was not put before the arbitral tribunal, save where the applicant shows they did not know and could not with reasonable diligence have discovered that ground, or put the evidence before the tribunal during the arbitration proceedings. It will also not rehear evidence that was heard by the arbitral tribunal, unless the interests of justice dictate otherwise.
These changes represent a significant restriction on a party’s right to challenge substantive jurisdiction.
Upon hearing a jurisdictional challenge the court now has a menu of remedies, including remitting the award to the tribunal for reconsideration or declaring that the award (in whole or in part) has no effect.
In reducing the scope of jurisdictional challenges, parties should have more certainty that an arbitral award will be final.
Codification of Arbitrator’s duty of disclosure
The common law duty of an arbitrator to disclose circumstances that might reasonably give rise to justifiable doubts as to their impartiality has now been codified such that a proposed arbitrator must as soon as reasonably practicable disclose to the referrer (where disclosure is prior to appointment), or to the parties (where disclosure is after appointment), any circumstances which reasonably give rise to justifiable doubts to impartiality.
We would expect this codification to result in earlier disclosures, reducing the risk that a party will apply to remove an arbitrator, potentially scuppering the process.
Emergency Arbitrators
The Act provides welcome certainty as to the enforceability of final awards made by an emergency arbitrator, empowering them to make final awards which can be enforced by the courts.
Conclusion
It can be seen that the Act has introduced a number of changes that should increase the efficiency of the arbitral process and the certainty and enforceability of arbitral awards.
Where policyholders are referring adverse coverage decisions by insurers to dispute resolution, these changes should be welcomed, in the expectation that final decisions will be reached more quickly and economically.
Matthew King is an Associate at Fenchurch Law, Singapore.
Fenchurch Law warns the clock is ticking for Covid-19 Business Interruption claims
Fenchurch Law, the UK’s leading firm for insurance policyholders, has issued a warning to brokers to ensure their clients file any Covid-19 business interruption (BI) claims now, before they are time-barred.
Five years on from the pandemic, experts at Fenchurch Law are highlighting that the limitation period for Covid-19 BI claims will expire in March 2026, leaving affected businesses with less than a year to act.
Over the last five years, a series of high-profile battles between insurers and policyholders in the UK over BI wordings have expanded the scope of BI policies. The result is that policyholders now have more potential opportunities to receive compensation for the loss of business during the early months of the pandemic.
Fenchurch Law’s Managing Partner, Joanna Grant, warns that brokers need to act now to give their clients the best chance of success:
“Many industries were decimated by the pandemic that swept the world in 2020, with few more severely impacted than the hospitality industry, the long periods of lockdown taking a significant toll.
“During the last five years, we’ve fought for clients to get a fair outcome from their insurers. Though the pandemic was unprecedented, insurance policy wordings should be fair, proportionate and transparent, and we have found time and time again, that this was not the case. We’re still coming up against legal challenges regarding how to apply policy wordings, most recently the Non-Damage Denial of Access appeal brought by Liberty, which found for policyholders in holding that in composite policies, 'any one loss' limits applied separately to each policyholder rather than in aggregate across all policyholders. We are also involved in new cases being issued in court, including most recently a claim brought by the owner of the Franco Manca chain of pizzerias against QIC in respect of their Covid-19 losses.
For some businesses, there may be a long road ahead, so we urge brokers start talking to clients now, long before the liability period runs out.”
Joanna Grant is the Managing Partner of Fenchurch Law UK
Fenchurch Law and Saxe Doernberger & Vita, P.C. Announce Strategic Partnership to Strengthen Policyholder Representation
Saxe Doernberger & Vita, P.C. (SDV) and Fenchurch Law have announced a new partnership, uniting two leading firms focused on representing insurance policyholders in coverage disputes. On either side of the pond, SDV and Fenchurch Law share a common mission of levelling the playing field between policyholders and insurers. Now, both firms look forward to joining forces to offer an expanded range of services for multinational policyholders and brokers.
SDV and Fenchurch Law’s Commitment to Policyholders
SDV is one of the few U.S.-based firms dedicated exclusively to representing policyholders in insurance coverage disputes. SDV has locations in the Northeast, Southeast, and West Coast, serving clients all across America. A versatile firm, SDV brings together Big Law expertise with a boutique service approach to provide legal options for policyholders, tailored to their needs. Besides advocating for clients during coverage disputes, SDV also assists with policy purchase, renewal, and modification to help clients find the coverage they need.
SDV represents policyholders across a wide array of areas of practice, including bad faith claims, cyber risk, Directors & Officers liability coverage, disability insurance claims, Employment Practices Liability claims, environmental insurance, insurance for international businesses, life and disability insurance, municipal coverage, natural disaster coverage, policy review and analysis. The firm’s Risk Transfer practice group, robustly staffed, is specifically concentrated on comprehensive review of insurance policy and contract language to protect the interests of both individual policyholders and brokers.
Fenchurch Law is an international firm with offices in Copenhagen and Singapore, in addition to London and Leeds in the UK, that has long provided insurance advice and representation in complex, high-value claims. True to its founding values, Fenchurch Law advocates only for policyholders, never insurers. Its team includes attorneys with previous experience working on all sides of the insurance market, including as brokers, claims adjusters or insurer-side representatives, bringing deep industry expertise to help secure recoveries for policyholders in disputed claims.
Fenchurch Law’s clients include global multinationals, high net-worth individuals, and businesses of all sizes across a wide variety of sectors, both UK-based and across the APAC and Scandinavian regions. The firm has particular strengths in handling claims involving construction, property, energy, financial lines, political violence, and international risks insured into the London market.
Both companies have a rich history and proven track record as elite firms in the field of policyholder coverage disputes.
Two Firms with Shared Values and a Shared Purpose
Both firms have a history of supporting the insurance broker community, combining the firms’ legal skills with brokers’ commercial leverage to achieve the best possible outcomes for both policyholders. Both firms have also lived their commitment to never bring claims against brokers.
It is these shared values of focusing exclusively on policyholder interests, and working closely with insurance brokers, that have brought the two firms together in this new collaboration. Through this partnership, SDV and Fenchurch Law look forward to offering representation to international policyholders and brokers worldwide, on a scale that has not previously been possible.
This will allow more multinational businesses access to specialized representation in their coverage disputes and expert counsel when they are making high-value insurance policy purchase and renewal decisions. It will also empower both firms to extend the range of services and areas of practice offered to their existing and future clients by tapping into each other’s deep expertise in specific insurance concerns.
Neurodiversity Celebration Week – Ayo Babatunde
As part of our continued support of Neurodiversity Celebration Week (NCW), we asked associate Ayo Babatunde to share his personal experiences with dyslexia and dyspraxia. NCW is a global initiative aimed at challenging stereotypes and misconceptions about neurological differences.
Hello, my name is Ayo. I am an associate solicitor at Fenchurch Law, and I am dyslexic and dyspraxic.
If you are not familiar with dyspraxia, it’s a disability that affects movement, co-ordination and working memory. Our Deputy Managing Partner, Dan Robin, also has it, and has spoken about it as part of Neurodiversity Week (Q&A with Daniel Robin).
I was diagnosed with dyslexic and dyspraxic when I was 19. One of the things I have found hardest is acknowledging that my brain processes information differently. Part of my journey has been figuring out how my brain works to allow me to do my best in university and more recently the workplace.
I have put in a lot of time and effort (much through trial and error!) into understanding what specific techniques work for me. I’ve discovered that I really like mindmaps, tables and schedules, as they neatly organise information in a way that I can always refer back to (sort of like a crib sheet).
Part of managing my neurodiversity has been putting in place processes and frameworks to help me. For example, I love my regular walks around the City on my lunchbreak, as this gives time for my brain to reset (sort of like a brain-break!) which in turn allows me to be more productive.
For people with neurodiversity who have just been diagnosed, I would offer the advice that it’s important to understand what specifically works for you. We are all very different, even people with the same neurodiverse disability, so it is about putting in the time to figure out what best helps you individually. As alluded to above, this is unlikely to be a hole-in-one, but through trial and error you’ll get there. When you do, it is very rewarding.
Since joining Fenchurch Law, the conversation around neurodiversity is has been really honest and I’ve felt that I can be vulnerable about how my disabilities affect me in my day-to-day life. Through having a great support network at work and my own coping mechanisms, I have the confidence that I can achieve whatever I put mind to.
Thanks for reading!
Ayo Babatunde is an Associate at Fenchurch Law
Neurodiversity Celebration Week – Q&A with Daniel Robin
Neurodiversity Celebration Week (NCW) is a global initiative aimed at challenging stereotypes and misconceptions about neurological differences. As part of NCW, Deputy Managing Partner Dan Robin takes part in an open and insightful Q&A with Associate Dru Corfield, sharing his personal experiences and perspectives.
Dru: Hi Dan, thank you for agreeing to speak about your neurodiversity as part of neurodiversity week. It is an important conversation and something that the firm is big on supporting. I suppose the obvious first question is in what way are you neurodiverse?
Dan: I have dyspraxia.
Dru: And what does that mean to a layman? How does your dyspraxia manifest?
Dan: It affects my co-ordination, particularly hand-eye as my wife found out when we went (or tried to go) motorbike riding when we first met in Australia. Workwise it makes organisation challenging and has in the past affected my ability to write. It has also occasionally had an adverse effect on my time management.
Dru: How old were you when you were diagnosed, and what gave the game away?
Dan: 12. I think my parents sought a diagnosis based on issues with coordination and how disorganised I was with schoolwork.
Dru: What was the most difficult part of being dyspraxic as a teenager?
Dan: Back when I was in teenager in the late 90’s/early 00’s (don’t let the hairline fool you, I’m only 38) there was a real lack of awareness about dyspraxia, and at school the perception was that I was lazy and sloppy rather than ascertaining whether there was another reason behind it. It was also a challenge when first learning to drive, I started to learn on a manual car but quickly learnt that was not going to happen.
Dru: And how has public awareness of neurodiversity improved since you were diagnosed / a teenager?
Dan: It’s come on loads in the last 20 years. I think the biggest change is that neurodiversity has gone from being seeing as detrimental, to being accepted, to being seen in some circumstances as an asset.
Dru: How can being neurodiverse be an asset?
Dan: Where you have to work on certain things that don’t come naturally, it can make you better at then than those to whom it came naturally. As a Spurs fan (unfortunately), I will use Harry Kane as an analogy, had he not had setbacks and had to work on parts of his performance, he would not be the best striker in the world that he is today. There are also some neurological differences that lend themselves to the skills needed for professional services, running business etc.
Dru: How has it affected you rise at Fenchurch Law from an Associate in 2018 to the Deputy Managing Partner in 2024?
Dan: I think having to work on organisation skills and other elements of the roles I have had puts me in a unique position to help others / young members of staff – because simply put there were areas of my role which I wasn’t good at it but had to improve in order to develop. I would like to think that I am a good example of the fact that there are no barriers to progression if you are neurodiverse.
Dru: How have Fenchurch been with your neurodiversity?
Dan: The support has always been incredible; I was open from start and they immediately tried to put measures in to help me. I felt comfortable being able to tell the firm and they didn’t take it as a negative, because even 7 years ago the way neurodiversity was viewed in wider society was different to how it is seen today.
Dru: And finally, what advice would you give to neurotypical people when dealing with people with dyspraxia?
Dan: Take the time to understand. Particularly because it can manifest in a way that can be misinterpreted as someone having a lack of care, attention to detail or even laziness. There are measures in place to help with nearly all aspects needed for a professional services role, and it’s about working with the individual to work out what support they require. For example, with a junior lawyer, it may be accepting that they struggle with note taking in meetings, and finding a way to work with that, or they require instructions to them in a certain way.
Dru: Thanks very much for sharing, Dan.
Daniel Robin is the Deputy Managing Partner at Fenchurch Law.
Climate Risks Series, Part 4: California Wildfires - Insurance Insights
Fenchurch Law firmly believes that an outstanding approach to claims payment is fundamental to the health of any insurance market. In fact, Lloyd’s of London’s modern reputation for excellence owes much to its response to the San Francisco earthquake in 1906, when leading underwriter Cuthbert Heath famously instructed his local agent to “pay all of our policyholders in full, irrespective of the terms of their policies”.
With extreme weather events including earthquakes, hurricanes and storms on the rise, the most recent wildfires in Los Angeles present a number of challenges, and also opportunities, for California’s insurance market.
Background
The fires originated in the canyons above the Hollywood Hills and were swept into residential areas by notoriously strong Santa Ana winds. Although the areas affected are known to be at risk of wildfires, it is unusual for them to occur in the winter months. This year, however, a combination of drought and abundant vegetation (the result of above average rainfall in the previous two years) resulted in there being ample fuel for the fires to spread.
Evidently, climate change is increasing the risk of wildfires in the area, with a study from Stanford University predicting that the frequency and potency of these fires will only continue to escalate in the future.
Now contained, the most significant fires were located in the Pacific Palisades and Eaton, primarily upscale residential areas surrounding the Hollywood Hills. The Pacific Palisades, in particular, is home to a wealth of high-value residential property, with average sale prices above $3 million. The impact of this is that insured losses are set to be the highest in California’s wildfire history, with JP Morgan’s most recent estimates at $20 billion. For context, California's most expensive wildfire to date, the 2018 Camp Fire, resulted in insured losses of around $10 billion.
Beyond their initial response to claims payment, insurers will need to reconsider their approach to wildfire risk and implement resilience measures in order to continue to do business in the area, while maintaining adequate capital reserves and managing cumulative exposures.
A fragile home insurance market
In recent years, several leading insurers, including AIG and Chubb, have stopped issuing new home insurance policies in the state of California due to persistent losses against a backdrop of rising construction costs and property prices, with one deciding to reduce cover for 72,000 homes in the Pacific Palisades area. Underinsurance is a widespread problem.
At the end of last year, the California Department of Insurance sought to entice insurers back into the market by allowing them to use sophisticated catastrophe modelling and artificial intelligence to evaluate risk in fire-prone areas. That risk, together with the cost of any reinsurance, could then be factored into premiums. Unfortunately, the effect was that premiums soared, and it became increasingly difficult to obtain adequate cover at an affordable price.
In response, many homeowners opted to take out policies with the State-backed insurer of last resort, Fair Plan. Fair Plan distributes losses among a number of insurers based on their respective market share. If insufficient funds are available to cover its losses, Fair Plan can issue assessments requiring insurers in the voluntary market to contribute. If that happens, the Plan will impose a special assessment on home insurance policyholders across the State.
It is estimated that Fair Plan’s exposure in the Pacific Palisades alone is almost $6 billion, with luxury property specialists Allstate, Travelers and Chubb the most exposed. Post-Covid-19 construction prices could further increase final payouts, in addition to living expenses claims, typically capped at 30% of a property’s value. It has already been reported that regulators are allowing Fair Plan to collect $1 billion from private insurers to cover its recent losses.
The future
Following initial focus on the safe evacuation of residents, the State’s Insurance Commissioner has taken steps to mitigate the impact on California’s already fragile home insurance landscape, by issuing a moratorium preventing insurance companies from cancelling or not renewing policies in the affected areas for the next year. The Commissioner has also issued a notice to insurers urging them to go beyond their legal obligation and pay policyholders 100% of their personal property coverage limits without requiring them to itemize everything that has been lost.
The insurance industry has, historically, supported risk management in the aftermath of catastrophic events. It was the London market that established the first organised firefighting services when insurers hired their own firefighters to protect policyholder properties during the Great Fire of London in 1666, and it was Hurricane Andrew that changed the way insurers looked at hurricanes, and at natural catastrophes in general.
Following the 2018 Camp Fire, the Californian town of Paradise implemented a number of measures to build resilience to future fires, such as burying all power lines underground to reduce the risk of electrical sparks causing fires, requiring residents to remove vegetation in close proximity to their homes, and making grants available to homeowners willing to use fire-resistant materials in their rebuilding efforts.
At a property resilience level, the Insurance Institute for Business & Home Safety (IBHS) provides science-backed mitigation measures for homeowners to reduce the risk of wildfires igniting in their homes. The IBHS is an independent body, supported by the insurance industry to advance building science in order to reduce risk from natural hazards.
It remains to be seen whether the local insurance market will step up to deliver on the Commissioner’s request to pay out full policy limits without requiring proof of loss for every individual item, and how far mitigation measures will be implemented to respond to the difficulties that policyholders are likely to face in the coming months.
Given the impact of climate change, losses resulting from wildfires and other natural perils are likely to increase in severity in the future, highlighting the critical importance of a strategic approach to consumer protection and insurance market sustainability.
Abigail Smith is an Associate at Fenchurch Law
Climate Risk Series:
Part 1: Climate litigation and severe weather fuelling insurance coverage disputes
Part 2: Flood and Storm Risk – Keeping Policyholders Afloat
Part 3: Aloha v AIG – Liability Cover for Reckless Environmental Harm
National Apprenticeship Week – Simran Matharu, Apprentice Solicitor
This is an exciting National Apprenticeship Week for Fenchurch Law, as this year, we have our first apprentice on board. To mark NAW 2025, we asked legal apprentice Simran Matharu to share her experiences so far on the City Century apprenticeship scheme.
I’m excited to be Fenchurch Law’s first apprentice, choosing a degree apprenticeship was the perfect path for me, allowing me to gain real-world legal experience while working towards my qualification. Fenchurch Law’s specialist focus and supportive environment make it the ideal place to start my career, and I look forward to learning from experts in the field. Being part of the City Century apprenticeship scheme is empowering from my perspective. The programme not only creates valuable opportunities but also organises insightful events for current apprentices, featuring inspiring individuals from whom I gain invaluable knowledge.
I have always known that the traditional post-school route into university was not for me. However, I still wanted to pursue a higher education, and despite not wanting to follow a conventional route, I still wanted to embark on a conventional career. Having grown up in a family with many lawyers, I knew that a legal role was something I would do well in.
It has been really encouraging to see that saying no to university is no longer a limitation. In fact, saying no to university has helped me onto the job ladder quicker than a degree, and has offered me stability in the early stages of my career.
My day to day is very varied, and my first couple of years here will be mostly centered on integrating me into the office and learning about the industry we work in. In a week I spend four days working at Fenchurch Law as an apprentice and then one day studying at university.
This is my first job, so it has been helpful and enlightening to start in the operations team. I work with the operations team, performing tasks from billing, to answering calls, as well as saving and posting invoices. But I have also learnt about new software like Salesforce, Amiqus and Quill. I’m looking forward to moving onto Business Development in the coming year, as I’d love to learn more about how a successful boutique law firm grows and establishes its strong reputation.
At the end of my six years, I will have obtained both an LLB (Hons) in Legal Practice Skills and a SQE Qualification to become an England & Wales Solicitor, which will be great. But I think that a major benefit of this apprenticeship is that I will have gained a true understanding of working within the legal environment.
I have already learnt so much about myself, and have developed new skills that are only realised when you have participated in office life.
Having studied Philosophy, Politics, and Spanish in school, the insurance world was not something I knew a great deal about, like many my age. Instead I kept my options open, applying for as many legal apprenticeships as I could. Since joining Fenchurch Law, the team have been great at introducing me to the insurance market, and it is something I have now taken a real interest in.
I feel lucky to have already started working in such a specialised, niche area. I am extremely grateful for this opportunity and I am really excited to see what I can achieve in the next six years.
‘We are excited to be part of this initiative and it has been a privilege to have Simran join the team. She has already shown herself to be a real asset and we are looking forward to seeing her grow during her time with us and to being part of her journey to qualification.’ - Joanna Grant, Managing Partner at Fenchurch Law.
Clarendon v Zurich: Proposal Insolvency Questions Narrowly Construed
In a judgment handed down on 13 February 2025, the High Court upheld an application to strike out parts of an insurer’s Defence, in a coverage dispute arising from £8 million fire losses at a dental practice in Leeds. The decision is welcome news for policyholders and brokers, supporting a narrow approach to interpretation of insurer questions on insolvency of corporate entities related to the proposer, in statements of fact prior to inception of the policy.
Fenchurch Law act for the claimants, Clarendon Dental Spa LLP (the ‘LLP’) and Clarendon Dental Spa (Leeds) Limited (‘Clarendon’), in their action against Zurich and Aviva, following insurers’ refusal to indemnify property damage and business interruption losses arising from a catastrophic fire in June 2021. Following commencement of proceedings, settlement with Aviva was agreed on commercial terms, and trial of the claim against Zurich is listed for hearing in May 2025.
Duty of Fair Presentation
Zurich alleged that Clarendon had breached its duty of fair presentation in failing to disclose the insolvency of two companies (‘PDS’ and ‘JHP’) that shared a common director with Clarendon and the LLP. These entities were former partners of the LLP and resigned in 2014, before entering into creditors’ voluntary liquidation, following a business restructuring which led to the formation of Clarendon. The LLP continued to own the freehold of the premises. Prior to 2006, the freehold was owned by Back-to-back Investments Ltd (‘BTB’), a company in which the dentist owner of Clarendon was a director. BTB entered insolvent liquidation in December 2009.
As part of the insurance renewal process, a statement of facts was provided to Zurich, including an ‘Insolvency Question’: “Have you or any partners, directors or family members involved in the business … Been declared bankrupt or insolvent, or been disqualified from being a company director?”. Clarendon answered ‘No’. A proposal form was given to Aviva, including a declaration that “Neither You or Your directors or partners involved with The Business or any other company or business have … in the last ten years been declared bankrupt or insolvent or been the subject of bankruptcy or insolvency proceedings or been disqualified as a company director”.
Under section 3 of the Insurance Act 2015, an insured is required to make a fair presentation of the risk, including disclosure of every material circumstance that the insured knows or ought to know, ensuring that every material representation as to a matter of fact is substantially correct. Disclosure is not required of a circumstance as to which the insurer waives information (section 3(3)(c)).
Zurich’s Defence stated that Clarendon breached this duty by incorrectly answering the Insolvency Question and failing to disclose the liquidations. Clarendon argued that on its true construction, the subjects of the Insolvency Question were limited to Clarendon and its current directors only (and not other corporate entities that a partner/director of Clarendon had previously been involved with), so the answer provided was correct. The insurers advanced a broader interpretation covering any partner in any partnership, and any director of any company, that is or was involved in Clarendon’s business as a dental practice, including the LLP as owner of the freehold and the former operator of the dental practice prior to restructuring.
Contract Interpretation and Waiver
Applying the Supreme Court decision in Wood v Capita Insurance [2017], the Court held that a reasonable person would objectively understand the Insolvency Question as relating only to insolvencies of current partners or directors of the policyholder, and not former partners or members of the LLP.
A special rule applies where a question asked by an insurer is ambiguous. As explained by Snowden J in Ristorante v Zurich [2021]: when the court is interpreting questions posed by insurers, rather than a negotiated contract term, any genuine ambiguity is resolved in favour of the applicant. If there are two rival constructions, both of which are objectively reasonable, the insurer cannot impugn as misrepresentation an answer which a reasonable person would not consider to be false.
The questions were contained in standard form documents issued to policyholders, hence the reference to “partners, directors or family members”, used disjunctively to cover the various possibilities that a policyholder is a partnership, a company, or a sole trader. The wording should naturally be read as referring to current partners and directors, at the date of the question, not to former ones.
The Court also noted the practical difficulties that would be faced in answering the Insolvency Question, if it meant any entity ‘involved’ with the business, as alleged by Zurich. There would need to be an inquiry into the circumstances not only of the policyholder’s own former partners or directors, but also those of predecessor owners or operators of the business, and evaluation of whether any potentially relevant person was sufficiently involved to require investigation - placing an unrealistic and unnecessary burden on policyholders to determine those ‘materially involved’.
It was therefore held that Clarendon answered the questions correctly but even if they had not, they were at best ambiguous and that ambiguity would be interpreted in favour of the policyholders. Further, Zurich and Aviva waived any right to disclosure of the fact of the liquidations, by asking the insolvency questions in the terms presented. The Court therefore agreed to strike out parts of Zurich’s Defence, in relation to alleged material non-disclosures on insolvency.
Implications
The case serves as a timely reminder on the need for clarity in proposal form questions and answers, to avoid disputes. Insurers should ask carefully worded enquiries to sufficiently investigate at the outset, and any attempt to re-write or extend the scope of such questions at the claims stage should be refused.
Read the full judgment here.
Authors:
Daniel Robin, Deputy Managing Partner
Pawinder Manak, Trainee Solicitor