Finnish Supreme Court gave notable decision regarding interpretation of contractual liability exclusion in general third-party liability insurance. Partner Jussi Laasonen successfully represented the insurer which had denied the insurance coverage on the grounds of contractual liability exclusion.
Our Client’s policyholder (company A) had transported raw material to the company C by order of company B. During transportation, the raw material was contaminated because the employee of company A had neglected to clean the tank of the vehicle prior to the transportation. Because of the contamination company C’s products became defected. Company A was obliged to pay damages to the company B which had compensated the damages to the company C.
Company A claimed our Client to indemnify the paid compensations from GTPL-insurance. Our Client denied the coverage invoking to the exclusion according to which the policy did not cover any loss insofar as the liability is based on a contract, guarantee or other obligation, unless the liability would be incurred even without such an obligation being in force.
The Supreme Court ruled that because company A’s obligation to clean the tank was solely based on the agreement with company B the exclusion was applicable and the loss was not covered under the policy.
In addition, Supreme Court ruled that our Client had fulfilled its duty to disclose required by Finnish Insurance Contract Act.