The decision of the Supreme Court in BAI (Run Off) Ltd v Durham & Ors is the most recent chapter in long running litigation on the liability of insurers under policies taken out by employers to cover them for industrial diseases contracted by employees. The litigation arose over the liability of insurers for mesothelioma, an incurable form of cancer caused by exposure to asbestos, which can take up to 40 years to develop after a single exposure. Because of the long time lag, by the time employees become aware that they have suffered the injury, their employer may have been defunct for many years, so they are entirely reliant on insurance cover in any compensation claim. A group of mesothelioma sufferers, and their families, brought proceedings to recover compensation, and the employers’ insurers denied liability.
In 2010 the Court of Appeal considered the point at which liability arose under employers’ liability policies and concluded that it depended on the wording of the specific contract of insurance. There were two basic forms of wording, one referring to sustaining an injury and one referring to contracting the disease. In the former cases employees would not be covered by a policy in place at the point they developed symptoms and in the latter they would be covered by a policy in existence when the symptoms manifested themselves.
A sub-group of insurers appealed this decision to the Supreme Court, which rejected the approach taken in the Court of Appeal, adopting an approach which concentrated more on the underlying focus of the insurance cover, which was intended to comply with the provisions of the Employers’ Liability Compulsory Insurance Act 1969; to take an over precise view of the wording of policies could defeat that object. In the view of the Supreme Court, insurance in place at the time of exposure to asbestos will cover liability to employees who develop mesothelioma, even after many years have elapsed.
The decision was greeted (possibly between gritted teeth) by the insurer appellants as bringing certainty about liability for claims. While decided in the context of claims for mesothelioma, the same broad-brush approach may now be taken in other cases where there is a long time lag between the causation of an injury and its manifestation.