This is the question:
Hi Dr Allan,
I am hoping you can provide some guidance on the interpretation on the Action by Sea exclusion on the ISR.
“ Damage occasioned by or happening through water from or action by the sea, tidal wave or high water”
Provided that this perils exclusion 3 shall not apply if Damage is caused by or arises out of an earthquake or seismological disturbance.
I have a client with a Jetty and while it is agreed that general water damage arising from an inherent operation would not be covered, the perils of storm and cyclone and resultant wave action should be covered. Is this correct?
This is not necessarily so. If the wind brought up strong seas and the high waves caused the damage and not the wind, then the claim would be denied.
A loss adjuster would need to determine the proximate cause of the loss but assuming a storm results in large waves which damage the structure, I would think this would be picked up under the policy, if it can be determined that the storm resulted in abnormal uplift/ conditions?
With a policy such as this, no matter what causes an event, eg. A cyclone is typically covered but where there is an exclusion for action of the sea, then the exclusion overrides the original cause and the claim would not be paid. This is very old insurance law going back to early marine policies. The preamble of the exclusion is key.
Exclusions 1(a), 2, 3, (3 is the 1 you are referring to) 4, 5, 6 and 7 incorporate the phrase “occasioned by or happening through”. The meaning of this phrase was tested in Switzerland General Insurance Co v Lebah Products Pty Ltd (1983) 2 ANZ Insurance Cases 60-498. In that case, it was held that, “occasioned by or happening through”, imposes a lesser requirement of causal connection than proximate cause.
If you have my green books on the ISR or my yellow book titled Manning’s Six Principles of General Insurance (from page 121), I explain all this in detail.
That said the exclusion is also explicit in that action by the sea is not covered but for the likes of a seismological disturbance. However, the clause also refers to a tidal wave which is also caused by seismological disturbances?
The part about seismological disturbances is a right back of the exclusion so that if the tidal wave or action of the sea is caused by an earthquake the claim would be paid.
I hope this explains it.