AMI
Insurance does not have to contribute to the $217,000 cost of fighting a
January 2013 rural fire in Canterbury because the seat of the fire was a controlled
burn-off including waste from a landscaping business. Liability for fire losses arising from this
business activity was excluded.
The Fire Service is
suing to recover firefighting costs following rural fires. Both AMI Insurance and Lumley Insurance were
ordered by the High Court to cover the cost of a January 2013 fire in Selwyn
County which started on a lifestyle block owned by the Legg family. The Leggs held two insurance policies: AMI in
respect of their lifestyle block; Lumley for their separate landscaping
business. The fire spread when strong
winds ignited embers from a heap of ash, the remains of a burn-off several
weeks previously. This burn-off was
predominately plant waste from the Legg’s landscaping business, but included
waste from their lifestyle block.
The spread of fire
arose from two interdependent causes: burning lifestyle waste (which was
covered by the AMI policy) and landscaping waste (which was covered by the
Lumley policy but excluded in the AMI policy).
AMI said it did not have to pay.
The exclusion applied.
The Court of Appeal
said where there are two effective and interdependent causes, one within the
policy and one excluded, the exclusion prevails. AMI did not have to pay.
AMI
Insurance Ltd v. Legg – Court of Appeal (26.07.17)
17.087