Lydian successfully acted for an insurer in a coverage dispute over a casualty insurance policy

Lydian successfully acted for an insurer in a coverage dispute over a casualty insurance policy in which the notions “smallest identifiable part” and “dismantling and reinstallation costs” were interpreted by a Belgian court.

The case concerned the sale by the insured of fixed and mobile projectors in movie theatres all over the world which in specific climatological circumstances were confronted with fallouts. As a solution for this, the insured recalled the projectors in specific markets to install new components.

The Court of Appeal of Ghent recognised that the insured products were defective, but considered it unproven that the insured was legally obliged to conduct a recall operation.

The Court decided that there was no coverage for replacement or repair costs of the “smallest identifiable part” (a typical notion used in sophisticated comprehensive general liability policies) but rejected the very narrow interpretation the insured gave to this notion.

The Court was led in this analysis by what the insured actually offered to customers as individually available products.

With respect to the application of “dismantling and reinstallation costs”, the Court considered the interpretation of the notion “apply, applied” and decided that this does not require a physical incorporation into property of third parties, a mere connection with property of third parties was sufficient. However, the Court considered it not proven by the insured that the costs it claimed were anything different than repair and replacement costs of the “smallest identifiable part”, which are excluded from coverage under this policy.

The above judgment shows that courts indeed very carefully and meticulously analyse the nature and genesis of the various cost items claimed by an insured in order to correctly apply the provisions of a comprehensive general liability insurance policy.

This was the first ever case in which a Belgian court gave an interpretation to notions such as “smallest identifiable part” and “apply/applied” in the context of a comprehensive general liability insurance policy.

The Lydian team that successfully acted for the insurer consisted of Hugo Keulers (Partner) and Nik Vanheer (Associate).

For more information, please contact our Partner Hugo Keulers (hugo.keulers@lydian.be).