Bedfordshire Police Authority v David Constable (Syndicate 386)

The above case considered liability under the Riot Damages Act 1886 and, in turn, the application of the Syndicate’s Public Liability wording which provided an indemnity as follows:

“In respect of all sums which the assured became legally liable to pay as damages for the accidental damage to property occurring within the geographical limits during the period of insurance arising out of the business.”

Underwriters argued that the sums which the Claimant (Insured) sought indemnity were in respect of compensation under the Act. Underwriters contended that the Policy was triggered by an actionable wrong involving a breach of duty. In tandem, Underwriters maintained that liability under the Act did not arise out of the business as defined in the Policy.

The Court held that as damages was not legally defined in the Policy, Policy wordings were inconsistent. Some referred to pay compensation. Public Liability policies could extend to provide cover for liabilities other than tortious.

The Judge in this matter was critical of the wording of the Policy; not the “subject of any great deal of thought.”

Both Insurer/Insured were aware of potential liability under the Act and as Police Authority, the Insured would expect such liability to be covered.

The Court adopted an approach to reflect the intention of the parties. Accordingly, use of the word ‘compensation’ was not intended to be restrictive and the Act did impose a civil liability such liability arising out of the business of the Insured – Police Authority.

Insurers should have used clear and precise language had they intended to avoid such potential liabilities