Indemnity Awards Examined in Detail by Insurers
In a series of High Court judgments, known as the Bellhouse rulings, the judiciary has emphasized the need for insurers to clearly and properly plead their defences in consumer insurance cases. The judgments, Bellhouse & Anor v Zurich Insurance Plc [2025] EWHC 1416 (Comm) and [2025] EWHC 1551, were delivered in 2025.
The case revolved around Zurich Insurance defending a fire claim by alleging the policyholders had misrepresented their intentions about renovation works when taking out the insurance policy and relied on an exclusion related to damage caused by contract works. However, the Court granted the policyholders’ application for strike out/summary judgment against the insurer’s pleaded defences, highlighting Zurich’s failure to properly put forward their defence.
The rulings underscore the judiciary’s firm stance that insurers should clearly and substantively plead their defences in consumer insurance disputes, lest they face adverse judgment and cost consequences. Insurers must exercise greater care and precision in drafting defences, as failure to do so risks early dismissal of their defence and cost penalties.
The judgments also encourage insurers to conduct thorough investigations before pleading defences, especially when alleging misrepresentation or relying on policy exclusions. The decisions increase the potential for policyholders to obtain summary judgment if insurers’ defences fall short, strengthening consumer protection in insurance disputes.
Moreover, the Court of Appeal will soon consider the insurers' appeals against the initial judgment in the ongoing Covid-19 business interruption litigation. This litigation is significant for insurance companies, involving major insurers and concerning composite insurance policies and furlough funds.
In another notable case, the High Court handed down a judgment in a dental insurance case involving high-profile dentist Dr Raj Rattan MBE. The judgment may prompt a re-think in dental insurance, with Dr Rattan held vicariously liable and to owe a non-delegable duty.
In summary, the Bellhouse rulings serve as a reminder to insurers of the critical importance of paying careful attention to how their defences are articulated, particularly in a consumer insurance context, as courts will not shy away from basing cost orders on an insurer's conduct. The rulings reinforce the wider legal principle that parties in litigation, especially insurers, must not rely on unclear or perfunctory pleadings but must engage fully and transparently with the facts and law supporting their case.
- Besides the ongoing Covid-19 business interruption litigation, finance and business sectors are closely watching the upcoming Court of Appeal's decision regarding insurers' appeals, which could significantly impact the way insurance companies structure their defenses in consumer insurance cases.
- The rulings in the Bellhouse case have highlighted the need for insurers to diligently investigate events before pleading defenses, particularly in cases of misrepresentation or reliance on policy exclusions, as inadequate defenses may result in costly business consequences for the insurers.
