Insurance- material damage- multiple events-merger applies


In the decision of Crystal Imports Ltd v Lloyds Underwriters & anor [2013] NZHC 3513 on 19 December 2013 the High Court (Cooper J) considered the ability of an insured to recover under a material damage insurance policy for separate damage to an insured property during a single insurance policy period where the property was rendered a total loss by a later event in the policy period.  The relevant insurance policy period was from 20 March 2010 to 20 March 2011.  Relevant insured properties had specified sums insured in the insurance policy.  The sums insured were significantly less  than reinstatement costs.  The insured properties were damaged in the earthquake on 4 September 2010 and rendered a total loss by the earthquake on 22 February 2011.  The High Court decided that the doctrine of merger applied with the effect that once the buildings were a total loss by the February 2011 event the insurer had no liability for damage in the September 2010 event that was un-repaired and/or for which it had paid nothing.  The outcome would be different if the damage occurred in separate insurance policy periods.