Yet another case illustrates the wisdom of reading through the small print of commercial insurance policies to make sure that the risks you think are covered are actually covered by the policy.
In the case in point, supermarket giant Tesco was denied the right to claim compensation for the sum of money it had to pay out to Network Rail when construction operations Tesco had carried out caused the collapse of a tunnel, thereby causing a loss of revenue to Network Rail because their trains could not use the tunnel for six weeks.
When Tesco sought to reclaim the costs from its insurers, the claim was turned down on the basis that the policy covered only losses which were caused by a harm for which a liability arose in the law of tort. In particular, the policy covered losses resulting from nuisance to or trespass over the land concerned. The loss suffered by Tesco was not a loss due to a tort, so it had no right to claim on its policy.
Says <<CONTACT DETAILS>>, “You cannot be too careful when negotiating insurance. Make sure you read and understand the policy, particularly the limitations on cover, or you could get a nasty shock. We can advise you on the meaning of the wording of your policies.”
Tesco Stores Ltd. v David Constable and other members of Lloyds syndicate 386, QBD Comm, 14 September 2007. Reported in The Law Society’s Gazette, 4 October 2007.