In Tyco Fire & Integrated Solutions (UK) Ltd v Rolls-Royce Motor Cars Ltd [2008] EWCA Civ 286, Tyco had negligently caused damage to a Rolls-Royce plant during the course of constructing a sprinkler system. Tyco admitted negligence but claimed that it was not liable for the damage because Rolls-Royce was obliged, by virtue of a provision in the construction contract, to take out joint insurance indemnifying the parties in respect of Specified Perils, which included the said damage. Rolls-Royce had failed to comply with that provision. The case turned on whether, as a matter of construction, the provision had the effect that Tyco alleged. The Court of Appeal, in overruling the first instance judge’s decision, found that it did not. Tyco was not to be construed as a party which Rolls-Royce was obliged to name as a joint insured and therefore Tyco was not relieved of liability for its negligence.
This case demonstrates the need for absolute clarity when setting out which parties are to be covered by joint insurance.
