In Sealion Shipping Ltd and Another v Valiant Insurance Company (The “Toisa Pisces”)  EWHC 50 (Comm), Owners claimed an indemnity under a marine insurance policy with the Defendant Insurers for loss of hire of their vessel. When entering into the policy, Owners did not disclose two previous hull claims and a ten day off-hire period during which repairs were carried out. The Court was required to decide whether the Insurers were entitled to void the policy for failure to disclose material circumstances that would have influenced their assessment of risk.
The Court found in favour of Owners on this point. It was held that whilst disclosure of previous hull claims is good practice, in this case they were not material. The materiality of the hull incidents was linked to the extent to which they caused loss of hire. In respect of the undisclosed ten day off-hire period, this was not particularly long, took place nearly four years before the policy with the Insurers was entered into and did not result in a claim. As such, it was not material. The non-disclosure by Owners did not void the policy.
In addition, the policy provided that the Insurers would not be liable for machinery claims resulting from Owners’ failure to exercise “due diligence”. The Insurers argued that this provided them with a defence to the indemnity claim. The Court disagreed. The standard of care required of Owners was one of negligence, and “want of due diligence” meant a lack of reasonable care. On the basis of the facts of the case, the failures alleged by the Insurers did not amount to negligence.
The full case report is available on Bailii.