Confidential knowledge when insuring third party
(1) Gerling-Konzern General Insurance Co (2) Deutscher Lloyd Versicherungen v
(1) Polygram Holdings Inc
(2) Metropolitan Entertainment Inc: (1) Copenhagen Reinsurance Co UK Ltd
(2) Chiyoda Fire & Marine Insurance (Europe) Ltd
(3) Colonia Versicherung v (1) Polygram Holdings Inc
(2) Metropolitan Entertainment Inc (1998)
QBD Commercial Court (Tuckey J) 14/5/98
In an action relating to a life insurance policy, the defendants (the assured) were promoters of the rock band, The Grateful Dead. They insured the life of Jerry Garcia (JG), lead singer and guitarist, with the five plaintiff insurers for US$3m. The cover was confidential, i.e. JG was not to know of it, and thus it was not based on any medical examination. However, it was subject to a condition that "prior to the inception of this insurance the assured make enquiries of those of its officers and employees who are in regular contact with [JG] in order to ascertain that to their best knowledge and belief [JG] is in good health at the inception of this policy of insurance". At a trial of preliminary issues Timothy Walker J held that this condition was a warranty and a condition precedent to cover and hence to liability. The insurers alleged that the assured were in breach of the condition because they knew JG was not in good health. The assured accepted that JG was not actually in good health (he had diabetes, heart problems and was a user of hard drugs) but maintained that its officers and employees who were in regular contact with JG honestly believed that he was. This was the main issue before the court.
