Fire in affiliated company’s truck was covered by insurance

A Danish carrier had been hired to transport a wind turbine nacelle from Ringkøbing in Denmark to Worms in Germany. The carrier had leased a trailer from an Italian affiliated company. Along with a number of affiliated companies the Danish carrier was insured through a carrier’s liability insurance, whereas the Italian company was insured only through a freight forwarder’s liability insurance.

During the road carriage a fire arose in the truck. The nacelle was damaged beyond repair, and the Danish carrier had to pay damages amounting to approximately 650,000 EUR to the shipper. Subsequently, the carrier reported the loss under the liability insurance, but the insurance company refused to pay. The insurance company thought that at the time of damage, the truck was not the Danish carrier’s “own vehicle” as defined in the insurance terms.

Dispute about whether the truck was leased at the time of damage

The Danish carrier argued that the term “own vehicle” included rented and leased vehicles, and that the truck should be considered the carrier’s “own vehicle” as it was leased at the time of damage.

The insurance company agreed that the term “own vehicle” included rented and leased vehicles, but the insurer did not think that the carrier had proven the existence of a leasing agreement at the time of damage. This was supported by the fact, that the carrier initially had stated that the truck belonged to the Italian company but had not mentioned the leasing.

In addition, no invoices for the leasing had been issued until two months after the fire, and there was documentation of money transfers. Finally, the carrier had failed to register as “user” of the truck, even though this is required, when the truck is used for carriage of goods.

The Maritime and Commercial High Court: Insurance company has to cover the damages

The Maritime and Commercial High Court found that intermediate accounts with no money transfers are common in leasing relations between affiliate companies. Therefore, it was not relevant that the invoices had not been issued until after the time of the fire. Likewise, it was not important that the carrier had failed to register as “user”.

The Court found that at the time of the damage the truck was leased by the carrier, and because of this it was included as “own vehicle” in the carrier’s liability insurance. The insurance company had to pay damages to the carrier.

IUNO’s opinion

This judgment illustrates that it may be easier for an affiliated company to lift the burden of proof in regard to which objects are included in the insurance. In this case, the Court attached importance to the fact that the Danish and the Italian company had an agreement, even though there was no proof of payments or registration of the truck before the time of the fire.

The judgment has been appealed to the High Court of Eastern Denmark and we will return when the High Court has handed down its judgment.

[Judgment of the Maritime and Commercial High Court, 4 November 2014, case no. H-62-13]