Rectification of insurance policies

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Dunlop Haywards (DHL) Ltd (2)  Erinaceous Commercial Property Services Ltd -v- Erinaceous Insurance Services Ltd and (1) Lockton Companies International Ltd (2) MSI Corporate Capital Ltd & Others, [2009] EWCA Civ 354.8 (April  28, 2009)

The Court of Appeal considered the factual matters which may be taken into account by the courts in claims for rectification of insurance policies. The claimant insured alleged failure by the broker to arrange effective excess insurance coverage for the insured. An application was made by the defendant broker for joinder of the excess insurer to bind it to the outcome. The High Court decided that the case against the excess insurer was not strong enough to join it the litigation. The defendants appealed.

The Court of Appeal overturned the decision. It held that the defendants had a good arguable case for the rectification of the excess policy, on the basis of the contents of the quotation sheet and endorsement initialled by the underwriters. The Court also found that the possibility existed that the excess insurer’s interpretation of the excess policy lacked commercial sense.

This case is important because the Court of Appeal held the view that he litigation required the participation of the excess carrier to ensure an effective outcome.

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By Daniel W. Gerber and Sharon Angelino