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Lloyd's Maritime and Commercial Law Quarterly

English Insurance Law

Margaret Hemsworth *

CASES

53. Ansari v. New India Assurance Ltd1

Construction—property insurance—fire—cover expressed to cease on material alteration to the premises or material change in the facts proposed
The claimant, a freeholder of business premises, had property insurance with the defendant. To the knowledge of the insurer the premises were occupied by the claimant’s tenant. Following the destruction of the premises by fire, the insurer declined indemnity on two grounds: misrepresentation of facts, in that the insured had falsely represented that the premises were protected by a fire sprinkler system; and breach of condition of the policy, in that there had been a material change in use of the premises prior to the fire from wholesale kitchenware to scooters and mini motor-bikes, and/or a material change in facts as proposed in that the sprinkler system had been disconnected. The insured relied on an extension clause to protect the interest of the freeholder, who was expressed not to be prejudiced by an increase in risk without his authority or knowledge. The evidence at first instance was that the water supply to the fire sprinkler system had been cut off prior to the fire and that an isolation valve had been closed and covered by a filing cabinet, thus preventing access to a control handle.
On appeal, the key issues were whether (i) there had been a material change in the facts as proposed, and (ii) the insured had sufficient knowledge to prevent his relying on the extension.
Decision: The insured’s appeal failed.
Held: (1) The judge had been correct to proceed on the basis that the proposal form stated as a matter of fact that the premises were protected by a properly functioning automatic sprinkler system. Turning off the sprinkler system was a change in facts which had significantly increased the risk of damage by fire, whether or not it could also properly be regarded as an alteration in the premises themselves. Temporary disconnection or malfunctioning was to be contrasted with the facts in this case: the system had been rendered inoperative with a view to its remaining so for an indefinite period. The evidence was that there had also been a change in use of the premises.
(2)(a) The word “material” as used in the contract could not bear the same meaning as that in the context of misrepresentation and non-disclosure, because the contexts were

* Senior Lecturer in Law, University of Plymouth.
1. [2009] EWCA Civ 93; [2009] Lloyd’s Rep IR 562; [2009] 2 All ER (Comm) 926 (CA: Waller V-P, Thomas, Moore-Bick LJJ); affg [2008] EWHC 243 (Ch); [2008] Lloyd’s Rep IR 586 (QB: Patten J); noted Thomson, J [2009] JBL 508.

ENGLISH INSURANCE LAW

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