subject: Inherent Vice, Natural Deterioration And Associated Exclusions - What Is Inevitable - Part V [print this page] It is easy to justify public policy reasons for excluding the possibility of insuring against the wilful act of the assured, namely fraud, and against the policy covering an unlawful action. If, however, risk is considered from the assured's viewpoint then there is less reason for making uninsurable "inevitable causes" such as latent defects or inherent vice. If the assumption is made that the assured is not aware of the latent defect and the clause is wide enough to supplant the usual implied exclusion then he should be entitled to insure against it. So far as the assured is concerned, at the time of insuring the risk, the loss is not inevitable. It is perhaps easier to follow this line of reasoning in the case of loss caused by inherent vice or latent defect, which is hidden from the assured, but it is slightly harder to apply the same logic to physical processes. For example, it would be clear to any assured that iron will eventually rust. Perhaps, however, the element of timing is important in that although iron may rust, it might not cause loss during the course of the policy period.
In the Compagnie Des Bauxites Case (above), the Court of Appeal decided that a fortuitous event is an event which so far as the parties are aware, is dependent upon chance. It may be beyond the power of any human being to make it happen; it may be within the control of third persons; it may even be a past event, provided that the fact is unknown to the parties. Thus an unknown design defect was held to be fortuitous.
Inherent Vice, Natural Deterioration And Associated Exclusions - What Is Inevitable - Part V
