Good Company

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Monday, December 29, 2008

Somali Pirates: Insurance issues

Reported in the Times Online "Piracy insurance hinges on number of raiders":
The surge in piracy off the coast of Somalia could trigger legal disputes between marine and war risk insurers, a leading QC has warned.

Jonathan Gilman, QC, said that piracy could be covered by either type of policy - depending on the number of pirates involved. If 12 or more pirates are involved in an attack, according to Mr Gilman, the incident is likely be classified under the Public Order Act 1986 as a riot. These are covered by war risk insurers rather than by marine insurers. However, if the attack involves fewer than a dozen pirates, the incident would typically be covered by marine insurance.

Mr Gilman - editor of Arnould's Law of Marine Insurance, published by Sweet & Maxwell - said that because it was often very difficult to verify accurately the number of pirates involved in an attack, it could lead to legal conflicts. He said: “Piracy is normally covered by marine insurers, the exception being where the incident is legally a riot. There have been House of Lords decisions where it was held the word ‘riot' in insurance policies is to be given its strict criminal law meaning, so that the critical question is likely to be whether the number of pirates is 12 or more. It may be very difficult to assess accurately the exact number of pirates involved in any particular incident, which may result in disputes between marine and war risk insurers.
You gotta love this stuff.

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