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KR v Royal & Sun Alliance Plc [2006] EWCA Civ 1454

The true intention of an exclusion clause in a combined insurance policy issued to a company that ran children’s homes was to exclude liability for damage or injury caused by deliberate acts of persons who were to be regarded as in effect the insured company, as opposed to the acts of those who were mere employees. The deliberate acts of abuse by the majority shareholder and managing director fell to be attributed to the company and were within the exclusion as were the acts of those who were at the time of the abuse directors or de facto heads of the individual homes. Those were ‘managerial employees’ but that expression did not include anyone further down the company hierarchy.

10 November 2006

The appellant insurer (R) appealed against a decision ([2006] EWHC 48 (QB)) that it was liable to the respondents (K) in respect of their claims under the Third Parties (Rights against Insurers) Act 1930. K had been resident in children’s homes where they had suffered abuse. They had made successful claims in negligence against the company (B) that operated the homes. B’s majority shareholder and managing director (J) had been convicted of offences of indecent assault on young male residents. B had gone into liquidation. K then brought proceedings under the Act against R as B’s liability insurer. The insurance was combined insurance that included cover for bodily injury to any person, but excluded liability for injury or damage resulting from any deliberate act or omission of the insured. The wording was later extended to the insured’s directors and managerial employees. The judge held that R could not rely on the exemption because K’s claims against B had succeeded on the...

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