In Teal Assurance Company Ltd v WR Berkley Insurance (Europe) Ltd and Aspen Insurance UK  UKSC 57, the Supreme Court upheld the decisions of the Court of Appeal and the Commercial Court that an insured and its captive insurer were not entitled to choose the order in which claims were paid under a tower of insurance contracts in order to maximise the insured’s recovery under its professional indemnity programme. The general rule is that the liability of insurers under a liability policy arises when the insured’s loss is ascertained by agreement, judgment or award. The policy therefore meets each ascertained loss when and in the order in which it occurs.
The Supreme Court’s decision reiterates that very clear and unambiguous wording is required if the liability of insurers is to be triggered other than in the chronological order in which the underlying claims are ascertained. To read our London office’s update on this important case, click here. To read our previous analysis of these issues click here.