All Leisure wins major insurance case

All Leisure Holidays has won £2 million in damages plus costs in an insurance case.

According to Thomas Eggar, the law firm acting on the company’s behalf, the court's decision is key to the issue of financial failure insurance policies.

The case referred to All Leisure’s purchase, in April 2009, of Hebridean Princess and other assets from the administrators of Hebridean International Cruises (HICL).

HICL had purchased a financial failure policy from International Passenger Protection which was underwritten by four insurance companies.

The policy was designed to indemnify the passengers in respect of any net ascertained financial loss sustained from cancellation or curtailment of their travel arrangements as a result of HICL’s insolvency.

At the point of HICL going into administration, the passengers for the 2009 summer cruise season had paid either deposits or the full costs of their cruise.

This money was lost when HICL went into administration.

The insurers refused to pay out under the policy because All Leisure operated identical replacement cruises for the passengers at no extra cost.

In September 2009, the passengers formally assigned their claims under the policy to All Leisure and in March 2010, Thomas Eggar LLP issued a claim on behalf of All Leisure in the Commercial Court.

In a hearing yesterday, Mr. Justice Teare found in favour of All Leisure on all three issues. It was held that:

1. There was a cancellation of the cruises within the meaning of the policy.

2. The passengers had suffered a loss as HICL was obliged to repay the monies it had received for the cruises it was not able to operate. The benefits obtained from a subsequent agreement between the passengers and All Leisure did not eliminate the loss which existed prior to All Leisure agreeing to provide the replacement cruises.

3. The policy did not have an express term requiring the passengers to complete a claim form and if they did not the claim could not be advanced. In these circumstances as loss had been proved, the absence of a formal claim form did not result in the loss of the claim.

Victoria Brackett, partner at Thomas Eggar, said: “This was an interesting case in which insurers argued for a “consumer” interpretation of the policy i.e. what the customer would have understood.

“The Court very encouragingly based its decision on the actual policy wording and was keen to ensure the protection of the insureds as the policy intended. We are thrilled with the outcome for All Leisure. “

The four insurance companies which had underwritten the policy were Europäische Reiserversicherung AG, Groupama Insurance Company Limited, Novae Syndicates Limited and Sagicor Corporate Capital Limited.

by Bev Fearis