Insurance policies commonly exclude damage resulting from riot, civil commotion, insurrection and war. These exclusions can sometimes be very technical. Rather than look at particular definitions in depth, the author will, in this article, give a bird's eye view of some of these exclusions to raise the reader's awareness of how some of these exclusions may operate.
Insurers are generally reluctant to provide insurance against war and related risks. This attitude is readily understandable for the destructiveness of war and civil disorder nullifies the statistical basis of insurance.
Many of the terms used, for example, war, civil commotion and insurrection, are not physical risks but abstract states of affairs from which loss might result, arising from specific acts.
War
Types of war
The courts have recognised three different forms of conflict as constituting
'war' within the meaning of policy provisions.
War between nations
Where there has been a formal declaration of war, the existence of war is beyond
dispute. However, the courts also recognise the existence of war where there has
been an outbreak of hostilities, which is not accompanied by a declaration of
war and the nations may even maintain diplomatic relations. Therefore, in the
case of Kawasaki Kisen Kaisha of Kobe v Banham Steamship Co Ltd [1939] 2 KB 544,
the Court of Appeal in England held that Japan and China had gone to war in 1937
as a matter of fact.
Civil war
In Spinney (1948) Ltd v Royal Insurance Co Ltd [1980] 1 Lloyd's Rep 406, Mustill
J held that the official views of the government towards a given state of
affairs were not conclusive. The matter was, therefore, one of evidence. He gave
three criteria which will generally be of significance in determining the
existence or otherwise of civil war:
In the case of Pesqueriasj Secadevos de Bacalao de Espana SA v Beer [1949] 1 All ER 845, the House of Lords stated that there is a presumption that the term 'war' includes civil war in the absence of any indication to the contrary.
Guerrilla war
There is no English authority on whether guerrilla war constitutes war for
insurance purposes. The view of the United States Courts of Appeals in Pan
American World Airways Inc v Aetna Casualty and Surety Co [1975] 1 Lloyd's Rep
77 was that there will be war only if the guerrillas are acting on behalf of a
sovereign or quasi-sovereign government. Evidence that the guerrillas are well
organised will not be sufficient. The Courts of Appeals thus held that action by
terrorists belonging to the Popular Front for the Liberation of Palestine ('PFLP')
could not be regarded as taken in the course of war, as the PFLP was not
recognised as sovereign even by those Middle Eastern governments opposed to
Israel.
The fact that one of the three types of war exists does not mean that all losses occurring as a consequence of it will be automatically regarded as caused by it. In the Pan American case, the United States Courts of Appeals did not accept that the hijacking of an aircraft in Europe and its subsequent destruction by the PFLP was caused by the alleged war between the PFLP and Israel.
Riot
In the case of London and Lancashire Fire Insurance Co v Bolands [1924] AC 836,
the House of Lords held that words used in a legal document (ie an insurance
policy) should be given the meaning ascribed to them by the law in the absence
of any sufficient indication towards a contrary intention, and on that basis the
word 'riot' ought to receive its criminal law meaning.
Although the English courts have followed this decision, the United States Courts of Appeals in the Pan American Airways case decisively rejected it. The court noted that there were three possible meanings of 'riot': (a) the wide criminal law definition; (b) a somewhat narrower definition supported by some criminal law decisions which required an element of tumult; and (c) the meaning of riot in common speech, namely a tumultuous assembly of a large crowd. The Pan American case is authority for the proposition that the criminal definition of riot will not be applied where the construction of an insurance contract is concerned, and the weight of United States authority on the insurance meaning of 'riot' accepts the narrowest test, which is the ordinary and popular meaning of the word.
In Singapore, s 141 of the Penal Code (Cap 224) defines the offence of 'unlawful assembly' as 'an assembly of five or more persons' with the common object, among other things, 'to commit any mischief or criminal trespass or other offence'. Section 146 of the Penal Code (Cap 224) states, 'whenever force or violence is used by an unlawful assembly or by any member thereof, in the prosecution of the common object of such assembly, every member of such assembly is guilty of rioting'.
Therefore, the legal definition of rioting in Singapore is also much wider than that usually conceived in the common usage of the expression 'riot' as it only requires an assembly of five or more persons.
Civil Commotion
In Levy v Assicurazioni Generali [1940] 3 All ER 427, the Privy Council described civil commotion as 'a stage between
riot and civil war. It has been defined to mean an insurrection of the people
for general purposes though not amounting to rebellion ... . The element of
turbulence or tumult is essential. It is not ... necessary to show the existence
of any outside organisation at whose instigation the acts were done'.
Farewell LJ in Republic of Bolivia v Indemnity Mutual Assurance Co Ltd [1909] 1 KB 785 said, 'civil war goes through various stages, from riot through civil commotion and civil war'. English law does not require proof of any attempt to overthrow the government in order for civil commotion to be established so long as there is considerable turbulence and tumult. The position in the United States seems to be identical (see Harford Fire Insurance Co v War Eagle Coal Co 295 F 633 (1924)).
Insurrection and Rebellion
The word 'insurrection' implies an event or series of events forming part of a
purely internal conflict. It has been held in the case of Rogers v Whittaker
[1917] 1 KB 942 that action by an external enemy is not insurrection.
Insurrection, therefore, fits into the pattern of events ranging from riot to
civil war.
In Spinney, Mustill J expressed the opinion that an insurrection was, in the context of a war risk clause in an insurance policy, a limited rebellion and that a greater degree of organisation was necessary for a rebellion than for an insurrection.
Mustill J went on to hold that both rebellion and insurrection implied action against the existing government with a view to supplanting that government. Therefore, in the Spinney case, it was held that as the events in Lebanon at the time did not demonstrate an intention by any of the various factions involved in the fighting to overthrow the government, there was no insurrection.
In the Pan American case, the United States Courts of Appeals adopted the definition of insurrection as 'a violent uprising by a group or movement acting for the specific purpose of overthrowing the constitutional government or seizing its powers'.
Therefore, the intention of the hijackers in the Pan American case to strike a propaganda blow against the United States and not to overthrow King Hussein of Jordan meant that the insurers could not rely on the exclusion in the policy for insurrection.
It is clear from the foregoing discussion that the scope of cover or exclusions in insurance policies may warrant more than just a cursory examination by both the insured and the insurer alike, especially in tumultuous times.
Stanley Jeremiah
Goodwins Law Corporation