Introduction

Insurance underpins commerce. In doing so, it touches both directly and indirectly on a vast amount of what we do as lawyers, and on what our clients do in business. Knowing how insurance works, and how the law of insurance works, is an asset in almost every area of legal practice, from helping clients with their conveyancing, through negotiating supply contracts, right up to suing an alleged wrongdoer.

When your client borrows money to buy property, the client commonly needs to arrange for the property to be insured to full replacement value, and to have the interest of the lender noted on the insurance. Do you know what that signifies? Are you going to be asked to help make that happen, or to undertake that it has happened before funds are released?

When your client arranges a commercial contract for supply, one or other party is likely to want to know: what happens if the trucks or ships break down and the product doesn’t arrive? What happens if the goods are damaged in transit? In the energy and telecommunications sectors: who pays if the power supply stops? If the gas explodes? Or if the telephone just doesn’t ring? Suppliers often contract to remove or to limit their liability. Does your client expect that its insurance will fill the gap? The supplier may demand indemnities for their costs if their network, products or equipment are damaged after installation on your client’s land. Does your client think that its insurance will cover any damage, if it is called upon to pay? Is the client’s expectation correct, or should you be giving some warnings?

When your client has suffered a wrong, and is considering from whom they might be able to claim compensation, are they ignoring possible targets because they have gone out of business? The insolvency or liquidation of one or more of the wrongdoers need not necessarily be an obstacle. If there was insurance in place that would have covered the loss, there may be a statutory right to recover directly from the wrongdoer’s insurer, notwithstanding the intervening insolvency or liquidation of the wrongdoer.

How we make insurance contracts, and what we can do once they are in place underpins the decisions that have to be made in all these contexts. These examples remind us that insurance can affect commercial, property and litigation practice in areas that seem far removed from insurance itself.