Construction All Risks Insurance
Paul Reed QC and Contributors
Sweet & Maxwell Second Edition 2016
984 pages, £275.00
Reviewed by Christopher Symons QC
3 Verulam Buildings, London1
It took a very long time for English legislators to produce the Insurance Act 2015 (the ‘Act’) and as the author, Paul Reed QC, says: ‘the 2015 Act marks the culmination of a particularly long and drawn out legislative process and is the most substantial reform to insurance law in England and Wales since the introduction of the Marine Insurance Act over a century ago’. In fact, the process lasted from a Law Reform Committee Report in 1957 until 2015. However, the author of this excellent book has wasted no time in updating the first edition with the assistance of some named contributors. The Act came into force on 12 August 2016, and the text in this new edition is up to date as of the end of August 2016. While it means an earlier reach into the pocket than might otherwise have been the case, this prompt new edition is an entirely worthwhile acquisition.
For those familiar with the first edition of this book, little introduction is needed. However, those new to the book should know that it has the benefit of being both accessible and readable. It is accessible for the majority using this book who want to find the answer to a particular knotty question or problem and, at the same time, readable for those with a more general interest in the subject. Thus, by way of example, the historical overview will be of interest to a much wider readership than that struggling to understand the intricacies of Construction All Risks (CAR) insurance.
The book deals largely with English law, but with some helpful passages comparing English law with other jurisdictions. Apart from the genesis of the new Act dealt with below, there are references to cases in Canada and elsewhere when they throw light on the interpretation of contractual terms.2
The major addition to this edition is the treatment of the Act. In Chapter 5, the author leads us through the changes, providing some thoughtful insight into the ways the courts may interpret those areas of the Act that are less prescriptive. One example of this is the extent to which the courts will use the duty of utmost good faith to reach conclusions on the adequacy of disclosure and fair presentation. The book also covers the corresponding legislation in Australia and New Zealand, with some helpful analysis. The Act, in part, can be traced back to the law reforms enacted by New Zealand and Australia.3 This major change in the law brings English law more in line with the rest of the developed world at a time when there was increasing concern that the disproportionate remedies provided by English law were out of step with modern practice.
The chapter ‘Misrepresentation, Fraud and the Duty of Utmost Good Faith’ provides the reader with the old English law, which will continue to operate on contracts incepted up to 11 August 2016, together with the effects of the new law that operates on contracts incepting thereafter. There is also a new section providing an introduction to the duty of fair presentation under the Act, covering the major points of interest and the important features of the statutory regime.
The English Enterprise Act 2016, which introduces an implied term into every contract of insurance that the insurer will pay the insured’s claim within a reasonable time, is also examined. That act comes into force on 4 May 2017. The author provides some sensible insight on the likely approach of the courts as to what is a reasonable time within which to pay in advance of the courts, providing practitioners with more definitive guidance. Clearly, there will initially be much dispute as to when insurers should make payments, particularly in relation to such things as delay in startup claims, and it will take some time for a recognisable form of practice to be adopted.
The book also contains a new section on the Wellington Syndicate 2020’s Offshore Construction Project Policy (‘WELCAR’). WELCAR was first introduced in 2001. This section is invaluable to those involved in offshore construction projects and its insurance. The revised version of WELCAR is still a work in progress.
As well as updating this edition with the new Act, the book has references to all the material new authorities, thus saving the reader considerable time in performing research. The many internet references are carefully provided with the date the internet was accessed. The numerous dates from 2016 provide some assurance that matters in the book are up to date as well as providing the reader with ready access to the material available.
It is inevitable that in covering an area of insurance law in a comprehensive way it is necessary to cover a myriad of parts of legal jurisprudence that are secondary to the main subject matter. Thus, within the book, one finds a detailed analysis of the principles of construction (of words rather than buildings), thus enabling the user to find all that he or she needs in a single volume. The same might be said of the law of causation, which is also covered to the extent that it arises in relation to insurance risks.
I mentioned WELCAR, which is covered within the section dealing with marine all risks. But the book also covers aviation all risks and property all risks, thus providing a useful reference work for these important areas.
Specialist books on insurance, of which this is undoubtedly one, have to find a middle course between taking as read the basic principles of insurance law on the one hand and explaining to the reader those principles as they apply to the specialism being addressed on the other. In Construction All Risks Insurance this balance is nicely achieved. Thus, a person with no knowledge of insurance law is given some assistance on all those basic principles, while the specialist will not feel that he or she is being lectured on matters that might be considered trite.
At the end of the book, there is a helpful sample CAR project policy based on English law with up-to-date standard clauses in common usage. The ultimate value of any legal text is greatly enhanced by a good index to enable the user to locate all the references in the book that address the particular subject of concern. By using the Sweet & Maxwell Legal Taxonomy, the reader is provided with a decent guide to the content of the book, and users should find the index of great assistance in finding their way round this impressive book.
The book will be useful for all those involved with English insurance law: insureds in the form of risk managers and contractors, brokers seeking to place insurance in the CAR market and insurers who write such business, in addition to in-house lawyers and those lawyers practising in this area. It is an essential part of any library seeking to have access to the modern law of CAR insurance. I commend it to you.
1 The reviewer practices as an international commercial arbitrator and can be contacted at email@example.com.
2 See, for example, the treatment of defects exclusions with reference to Ontario law.
3 S 11 of the Act is to be compared with the Insurance Law Reform Act 1977 in New Zealand and the Insurance Contracts Act 1984 in Australia.