Aggregation in Cargo and Logistics Insurance Claims: what insurers must prove when aggregating by accident, occurrence or event
In our experience, aggregation clauses are among the most heavily contested provisions in cargo and logistics insurance. They govern whether multiple losses are treated as a single claim for the purposes of applying limits, deductibles, and sub-limits, often making the difference between meaningful recovery and severe underinsurance.
While insurers frequently assert aggregation where there is a run of thefts, shortages or logistics failures, English law does not permit aggregation by default. The outcome turns on policy wording, causation, and the factual coherence of the losses said to aggregate.
The Central Importance of Wording
Aggregation is not governed by a single legal test, but depends on the policy wording selected. English law distinguishes between:
- Event/occurrence wording, which is construed relatively narrowly; and
- Originating cause/source wording, which allows a much broader backward search in the causal chain.
Courts have repeatedly emphasised that an “event” is something that “happens at a particular time, in a particular place, and in a particular way” (see AXA Reinsurance (UK) plc v Field [1996] 1 WLR 1026 (HL)). By contrast, where a clause aggregates by reference to an “originating cause”, aggregation may extend to a continuing state of affairs or a common operational failure, as considered by Spire Healthcare Ltd v RSA [2022] EWCA Civ 17.
Cargo and logistics policies frequently sit closer to the former category, even when they use hybrid language that permits aggregating a series of accidents or occurrences.
Accident, Occurrence And Event: Distinct Concepts
In logistics policies, theft or loss of cargo is typically treated as an “accident” or “occurrence”, that is, a discrete fortuitous incident, often involving deliberate human conduct.
Where a policy allows aggregation of:
“a series of accidents or occurrences arising out of one event in any one location”
the structure of the clause matters.
In our view, the accident or occurrence remains the primary operative unit. The insurer must first establish that multiple losses can properly be described as arising out of one event (”event” being used here in the same functional sense as an ‘occurrence’, namely a specific happening in time and place) before aggregation can follow.
This hierarchy is critical, and it prevents insurers from eliding multiple independent thefts or interceptions into a single claim by appealing to a high‑level narrative (e.g. “organised crime”, “systemic theft”, “criminal gangs” etc.) divorced from the actual incidents.
Series of Losses
Secondly, on the above wording, insurers must prove that the multiple losses are a “series”; in other words that there is some connection between the thefts and they are not simply a number of unconnected happenings.
What Insurers Must Prove: The Legal Burden
Where aggregation is relied upon in relation to the number of limits applicable, the burden lies squarely on insurers to prove that the losses aggregate. To aggregate multiple cargo losses by reference to accident, occurrence or event wording, insurers must demonstrate the following:
- A Single Identifiable Event
Insurers must identify one event capable of unifying the losses. This cannot be merely a shared background risk or an industry‑wide problem. The courts have consistently rejected attempts to aggregate by reference to general conditions, vulnerabilities or ongoing criminality.
As the Supreme Court held in AIG Europe Ltd v Woodman [2017] UKSC 18, losses must be connected by more than similarity or coincidence; there must be a real inter‑connection such that they “fit together”, rather than being linked only through external background factors.
An assertion that multiple thefts were committed by an organised crime group is not sufficient unless the insurer can point to a specific operative event, for example, a single coordinated operation, decision or execution, rather than a series of similar opportunistic crimes.
- Causation: Losses Must “Arise Out of” That Event
Even if an event is identified, insurers must show that each loss arose out of it. This incorporates orthodox principles of legal causation.
Courts have repeatedly warned against treating the causal language in aggregation clauses as infinitely elastic.
In logistics contexts, where thefts occur:
- days or weeks apart,
- at different depots or distribution centres,
- involving different carriers or routes,
it becomes increasingly difficult for insurers to demonstrate that each loss arose out of the same event rather than out of separate, self‑contained criminal acts.
- Unity of Time, Place and Circumstances
Although not a rigid checklist, the “unities” analysis remains a powerful analytical tool where aggregation turns on event or occurrence wording.
Following Kuwait Airways Corp v Kuwait Insurance Co SAK [1996] 1 Lloyd’s Rep 664, courts typically examine:
- Unity of time – Were the losses contemporaneous or closely proximate?
- Unity of place – Did they occur at the same or related locations?
- Unity of cause – Were they caused by the same operative act or incident?
- Unity of intent – Where human action is involved, was there a single purpose or plan?
Where cargo losses are dispersed across time and geography, and where no single coordinated operation can be demonstrated, these unities are unlikely to be satisfied. Similarity of method, or repetition of thefts along a supply chain, is not enough.
- “One Location” Means What It Says
Many logistics policies restrict aggregation to losses arising from “one event in one location”. This is a significant limiting factor.
Insurers must demonstrate not only a single event, but a single location in a meaningful sense. Attempts to characterise an entire logistics network, route corridor, or regional supply chain as “one location” have little support in English law. Policyholders are entitled to insist on a physical and geographical reality, assessed from the standpoint of a reasonable observer, not by reference to the insurer’s preferred level of abstraction.
Common Insurer Arguments and Their Weaknesses
Insurers frequently argue that multiple cargo thefts form part of:
- a single criminal enterprise,
- a continuing modus operandi, or
- a sustained campaign against the insured.
These arguments may carry more weight under originating cause wording, but under event‑based formulations, they face real difficulty. As the courts made clear in Woodman, similarity is not connection, and a shared background explanation does not establish a unifying event.
Even where organised crime can be shown, that does not compel total aggregation.
English law permits partial aggregation or clustering where appropriate, recognising that separate events may exist within a broader narrative.
Practical Implications For Policyholders
For policyholders facing aggregation assertions in cargo and logistics claims:
- Ensure that insurers identify the specific event relied upon.
- Test whether causation genuinely runs from that event to each loss.
- Scrutinise unity of time, place and circumstances.
- Resist attempts to substitute high‑level descriptions for factual proof.
Aggregation is not achieved by labelling losses as “systemic”. It must be earned by evidence.
Author
Toby Nabarro, Director, Singapore
Singapore’s factory output boom: Is your Business Interruption cover keeping up?
In the News… is a new blog series from Fenchurch Law that translates today’s headlines into practical insights for policyholders. Each post is concise, actionable, and designed to help businesses and brokers navigate an ever‑changing risk landscape.
Singapore’s Manufacturing Surge – What It Means for Your Insurance
On 26 November 2025, The Straits Times reported: “Singapore factory output surges 29.1% in October, more than expected, led by pharma and electronics.”. This is great news for the economy, but it raises an important question for policyholders: Is your Business Interruption (BI) insurance keeping pace with your growth?
When your business expands rapidly, the insurance arranged months ago may no longer reflect your current exposure. Underinsurance is a real risk, and if disaster strikes, it could lead to a costly insurance dispute over your Business Interruption claim.
Why Rapid Growth Creates Underinsurance Risks
For high‑growth sectors like electronics, pharmaceuticals, and aerospace, output and revenue can soar far beyond the figures declared at renewal. If your factory is producing 50% or 100% more goods than before, a shutdown due to fire or machinery breakdown would result in much larger financial losses per day. But will your BI policy cover that?
Business Interruption insurance is designed to compensate for lost income when operations are disrupted by an insured peril. The problem? BI limits are usually based on projected gross earnings. If those projections are outdated, you may be underinsured, and any claim could be reduced significantly.
The Cost of Underinsurance
Underinsurance isn’t just a technicality; it can be financially devastating. If your BI cover only reflects 70% of your actual gross profit, your claim payout could be cut by 30%. In effect, you become your own insurer for the shortfall.
How to Avoid an Insurance Dispute: Practical Steps
To protect your business and avoid disputes over BI claims, take these actions now:
- Review BI Values Immediately - Compare your current gross profit with the figure on your BI schedule. If turnover has spiked, update the insured amount.
- Check Your Limit of Liability - Ensure the maximum payable under your BI policy matches your current exposure. Evaluate whether your indemnity period remains adequate.
- Use Policy Extensions - Look for clauses like “130% uplift” or adjustable BI cover. These can provide a buffer, but they’re no substitute for accurate declarations.
- Scenario‑Test Your Coverage - Model a worst-case interruption (e.g., six-month shutdown). Would your BI limit cover the loss? If not, you’re underinsured.
- Consult Your Broker on Mid-Term Adjustments - Don’t wait for renewal. Most insurers allow endorsements mid-policy to increase BI limits for a pro-rated premium.
- Avoid Intentional Underinsurance - Cutting declared values to save premium is a false economy. When a claim arises, the deduction for average will bite.
- Update Related Covers - Property damage values and contingent BI cover should also reflect your expanded operations and supply chain dependencies.
Bottom Line: Stay Agile
Singapore’s factory output boom illustrates how rapidly risk profiles can shift. A BI policy should never be “set and forget”. Regular reviews and timely adjustments are essential to avoid underinsurance, protect profits, and prevent costly insurance disputes when making a Business Interruption claim.
Author
Toby Nabarro, Partner, Fenchurch Law Singapore
The Good, the Bad & the Ugly: #19 (The Ugly). Rashid v Direct Savings
Welcome to the latest in the series of blogs from Fenchurch Law: 100 cases every policyholder needs to know. An opinionated and practical guide to the most important insurance decisions relating to the London / English insurance markets, all looked at from a pro-policyholder perspective.
Some cases are correctly decided and positive for policyholders. We celebrate those cases as The Good.
Some cases are, in our view, bad for policyholders, wrongly decided, and in need of being overturned. We highlight those decisions as The Bad.
Other cases are bad for policyholders but seem (even to our policyholder-tinted eyes) to be correctly decided. Those cases can trip up even the most honest policyholder with the most genuine claim. We put the hazard lights on those cases as The Ugly.
#19 (The Ugly): Rashid v Direct Savings Limited [2022] 8 WLUK 108
Rashid v Direct Savings Limited considered the novel issue of how limitation applies to claims made under the Third Parties (Rights Against Insurers) Act 2010 ("the 2010 Act"), as compared with claims under the “old” Act (“the 1930 Act”).
The 1930 and 2010 Acts in summary
Both Acts, generally speaking, provide a mechanism for persons with claims in against an insolvent but insured defendant to seek indemnity from that defendant insurer. The 1930 Act was given a significant and welcome overhaul in the shape of the 2010 Act.
Under the 1930 Act, following Post Office v Norwich Union [1967] 2 QB 363, claimants with a claim against an insolvent, insured defendant first had to establish a liability against that defendant before being able to bring an ascertained claim against its insurer. This created a two-stage process: (i) establish a liability against the insured, and (ii) bring a claim under the 1930 Act for payment by its insurer. Step (i) was required despite the possibility that step (ii) might fail.
By contrast, section 1(3) of the 2010 Act includes the express provision that:
"The third party may bring proceedings to enforce the rights against the insurer without having established the relevant person's liability; but the third party may not enforce those rights without having established that liability."
The 2010 Act thus removes the first stage required under the 1930 Act and instead allows claimants to bring a claim directly against insurers of insolvent defendants where they have policies which might respond to the claim but where the insurer has denied indemnity.
Limitation, and FSCS v Larnell
There is a long-established principle for claims against insolvent defendants that, where the claim was not time-barred at the onset of the insolvency process, time ceases to run for limitation purposes (Re General Rolling Stock Co Ltd (1872) LR Ch App 646).
In Financial Services Compensations Scheme Limited v Larnell (Insurances) Limited [2005] EWCA Civ 1408, the Court of Appeal was required to determine the question of limitation for claims brought under the 1930 Act.
The claimant in Larnell had commenced proceedings more than six years after the cause of action had accrued and more than three years after he had the knowledge relevant for the alternative limitation period under section 14A of the Limitation Act 1980. However, the insured had entered liquidation just within that three-year limitation period. The claimant argued that under statutory regime of the Insolvency Ac 1986 the provisions of the Limitation Act were suspended, and the claim was in the time.
The Court of Appeal held that the two-stage process for bringing a claim under the 1930 Act meant that the first stage (the claim against the insolvent defendant to establish a liability) fell within the insolvency regime. This stage was a claim in the insolvency. Therefore, in line with Re Rolling Stock Co, limitation ceased at the onset of the insolvency.
It followed that limitation for the second stage (the claim against the insurers) also ceased at onset of the insolvency, and the insurers were unable to rely on the limitation defence.
Rashid v Direct Savings Limited
The cessation of limitation under the 1930 Act established in Larnell was considered in Rashid but this time with reference to the 2010 Act. The Judge concluded that the benefit of the insurance policy issued by the insurers was not an asset in the insolvency and that the right to bring a claim against them was not dependent on first establishing liability against the insolvent defendant and instead arose at the onset of the defendant’s insolvency event occurs. Accordingly, held the Judge, claims under the 2010 Act do not fall within the insolvency regime, and so the usual limitation requirements applied.
The Claimant in Rashid argued that someone in his position should not be worse off under the 2010 Act as compared with the 1930 Act. However, as the Judge commented:
"In most respects a claimant was better off under the 2010 Act with the ability to sue the insurer direct without first having to establish liability against the insolvent insurers … It may be that an unintended effect of these changes is that the pause on limitation first recognised in Larnell would no longer be available to a claimant but it would be unwise to assume that this was seriously considered by the drafting team."
We therefore consider Rashid “ugly” for policyholders – or, more accurately, for claimants bringing claims against insolvent policyholders. It represents an important but correctly decided change to the law regarding limitation in insolvency and claims made directly against insurers. Policyholders and their brokers should be conscious of this change and consider bringing direct claims against insurers under the 2010 Act well before limitation becomes a potential problem.
Toby Nabarro is an Associate at Fenchurch Law.