Late Payment of Insurance Money

Abstract

The question of damages for failure to pay sums due came before the House of Lords in 2007 in the Sempra case. Although not the main ground of the decision, the House stated that a claimant would succeed, if the claimant satisfied the usual tests of 'remoteness' of loss. The article shows how difficult and thus expensive it is to reach what to most is an obvious result, underlining the importance of particular judges, and that counsel need to 'know' the judges before whom they argue a case. People might well conclude that the Sempra ruling covers failure by insurers to pay insurance money on time. The article explains why it does not, with reference to leading cases, including those supporting a bizarre rule of English insurance contract law concerning the nature of insurance cover. The article then considers the likely response to the issue in other countries of common law, and how it might be seen in Europe. The article concludes that English law needs reform - not new precedent, but new legislation, and the chance that through current work at the Law Commission, this will occur.