Scottish Coal Company and ors v. Royal and Sun Alliance Insurance plc and ors [2008] EWHC 880 (Comm) concerned a claim brought by coalmine owners against a consortium of insurance companies in respect of a roof collapse in May 2000. Liability centred on the unsuccessful attempt of the owners to mine through a roadway (or cross cut). The insurers’ case was that the planned attempt meant that there were material changes in the risk, which imposed obligations of disclosure on the mine owners in the run up to the insurers’ decision whether to revoke the provisional notice of cancellation contained in the Review Clause of the policy.
 
The Court found that there had been a non-disclosure but was unable to form a judgment on whether the non-disclosure would have influenced the insurers’ decision in either accepting the risk or settling the terms of insurance (as provided for by General Clause 1 of the policy). In any event, this was unimportant. The Court found that when the insurers agreed to a 1 month extension of the policy, subsequent to learning of the non-disclosure, there had been an unequivocal affirmation of the contract. The insurers were fully aware of their rights prior to the extension and had not granted the extension against any reservation of rights. Accordingly, the policy could not be avoided on the basis of non-disclosure.
 
This case yet again demonstrates the need for insurers to exercise extreme care where they have knowledge of circumstances giving rise to a defence of a claim.”