Read the small print

I've got the builders in. They are pulling down the plasterboard ceiling in the living room. Or rather, pulling down the remaining bits, following the flood. The insurance company has been ever so good about it all. "Oh, we're quite used to receiving emergency telephone calls from people returning home from a spell abroad to be greeted by a waterfall shovelling squillions of gallons from loft to basement via the banisters."

Mind you, there was some degree of panic on my part. I couldn't find the insurance policy. And when I did find it, I knew damn well that I had never read it. People don't, do they? Sod's law played its role: there was a handful of exclusions and limitations and ifs and buts; it was rather like reading a Standard Form JCT wiggly-woggly edition with 300 amendments. Bless them, these insurers, they make lawyers a really good living.

Take, for example, Richard Hayward's little problem. Norwich Union wriggled a bit when his Porsche 911 Carrera got nicked. Hayward had zoomed across from Cardiff to Newport and pulled in for fuel. He queued up at the kiosk to pay. Strange, he heard the roar of a Porsche 911; sod it! It was his Porsche 911! He dashed out of the shop and yanked at the car door; the bloke inside had locked it and was fiddling with a gadget to override the immobiliser. Hayward yelled at the bloke and defiantly stood in front of the car. The thief revved till it roared; Hayward escaped with his life; the thief got his car.

Hayward now read his insurance policy. Sod's law played its role again. The exclusion, ifs and buts clause, said: "Go to hell with your claim if your car is nicked while the keys are left in, or on, your beloved motor car." And, guess what?

Hayward had left his keys in the ignition. He had to sue Norwich Union.

The insurer said the small print required customers to remove the key from the ignition and lock the doors before leaving the car unattended. The High Court judge had to interpret the wording in the same way as is frequently required for building contract documents. In the context of the relationships and policy overall, he decided that the words of exclusion only applied if the car owner had been reckless, rather than merely negligent. Hayward had been negligent in relying on the immobiliser, but it was plain that this heist was a professional car theft and the car was not left unattended simply by his being in the shop. So Norwich Union had to stump up the £75k.

Mr Justice Gibson examined and praised the careful judgment of the first judge, then dismantled it piece by piece and reversed the decision

Norwich Union appealed. The decision, Hayward vs Norwich Union Insurance is an interesting lesson in interpretation. Mr Justice Gibson examined and praised the careful judgment of the first judge, then dismantled it piece by piece and reversed the decision. Norwich Union didn't owe Hayward for his Porsche 911.

At the first trial, Norwich Union admitted that its approach to "ignition key" theft claims was not to apply a strict interpretation of a policy's wording. For example, if you were standing next to your car and were bundled out of the way by a thief who made off with your Porsche, the insurer would still pay out even though the key was in the ignition. The Court of Appeal was only able to interpret the words used in the policy. The obvious purpose of them was to encourage elementary precautions in relation to ignition keys so as to reduce the risk of opportunist theft. If keys "had been left" in the door or boot or bonnet or ignition or on the roof so as to be highly visible to a thief and a theft ensued, Norwich Union could refuse to pay out.

Mr Justice Gibson used another useful test of interpretation; ask if the words "keys have been left" produce an unreasonable meaning. If an adult passenger had been left in the car when Hayward went to pay, the keys would not have been "left". Nor would they if Hayward had been hauled from the car by a robber or had gone to get something out of the boot and was robbed of his car. So, the plain meaning of "keys had been left" did not produce an unreasonable meaning.