Municipal Mutual Insurance Ltd v Sea Insurance Co Ltd [1998] Lloyd's Rep IR 421 is a key authority on how the courts decide whether losses "arise out of one event". It is known for applying the so-called "unities" test, which asks whether the losses share a unity of cause, locality, time and, where relevant, the intentions of those involved.
The case arose from damage to cargo during handling operations at a port. The question was whether repeated incidents of negligent handling, occurring over a period, could be aggregated as arising out of a single event for reinsurance purposes. The answer turned on whether the incidents were unified enough in cause, place and time to be described as one event.
The Court of Appeal applied the approach that had developed in earlier aggregation authorities. To decide whether losses arise from one event, a court stands back and asks whether a reasonable person would say the losses were the consequence of a single unifying event. The relevant factors are:
Where the losses are spread across time and place and flow from repeated separate acts, they will usually not satisfy the unities, and an "event" wording will not aggregate them.
Although this case came from the cargo and reinsurance world, the unities test is applied whenever a professional indemnity policy aggregates by "event" or "occurrence". It explains why a series of separate professional errors, made at different times for different clients, will rarely be gathered up under an "event" wording. The test is intuitive but fact-sensitive, and small differences in the facts can change the outcome.
Firms arranging cover as insurance brokers should understand the unities when advising on an "event" wording, and surveyors whose site work is spread across many separate instructions should note how unlikely such claims are to aggregate as one event. Apex reads these wordings in the light of the case law when arranging professional indemnity cover.
The unities test is fact-sensitive, so the detail of your work matters. Ask:
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 724952. This entry is general information, not advice on any particular policy.