Court of Appeal considers meaning of requirement to notify insurers "as soon as possible" after event likely to give rise to a claim

The Court of Appeal has confirmed that an insurer could not rely on a condition precedent relating to notification to avoid liability under a public and product liability policy: Zurich Insurance PLC v Maccaferri Limited [2016] EWCA Civ 1302.

At first instance, the Commercial Court rejected an argument that the requirement to notify “as soon as possible” meant the obligation arose when the insured could with reasonable diligence discover that an event was likely to give rise to a claim. It held that this simply referred to the promptness with which notice was to be given once there had been an event likely to give rise to a claim. The words did not indicate an implied duty of reasonable inquiry. The Court of Appeal upheld this decision, noting "[i]f Zurich wished to exclude liability it was for it to ensure that clear wording was used to secure that results. It has not done so."

Although the insured in this case obtained a favourable outcome, notification clauses continue to remain a trap for the unwary and are often a source of dispute between insureds and insurers. The Court of Appeal's decision and its practical implications are considered further in our Insurance and Re-insurance Disputes e-bulletin.