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ERS allowed to rectify policy to avoid £4.6mn loss

A UK court has allowed motor syndicate ERS to amend a policy after rival insurer Axa tried to claim it should have been liable for a £4.6mn car crash.

Axa sued ERS after paying out for its portion of a £4.6mn motor loss almost a decade ago, alleging that the claim should have been covered by an ERS policy.

The court accepted that ERS's policy wording did leave it liable for part of the loss but, in an unusual decision, it gave the Lloyd's syndicate permission to amend the policy almost 10 years after the event.

ERS had written a fleet policy that covered 3,000 staff working for pharmaceutical giant GSK, which subscribed to its employee car scheme.

Separately, Axa had written a policy covering vehicles GSK rented from National, a car hire company.

In 2006 one of the vehicles rented from National was involved in a catastrophic accident that left a South African motorcyclist paralysed.

The French insurer settled the claim, agreeing to cover half of the loss, with the hospital that treated the motorcyclist paying the other half amid allegations of negligence on its part.

But in 2013 Axa brought a case alleging that under the broad wording of the GSK fleet policy, ERS was liable for 50 percent of the claim.

The Lloyd's insurer subsequently brought a separate case against GSK and Axa in the UK Commercial Court asking Mr Justice Males to give it permission to amend the 2006 policy, which was not intended to cover rented vehicles.

ERS argued that despite the policy wording it was not designed to cover vehicles rented from National, for which it received no premium.

It added that premium had been charged on a per car basis and that no extra had been charged for the cars rented from National.

In a ruling on Thursday (23 July), Mr Justice Males found that ERS should not have been liable for the claim and gave it permission to amend the wording of the 2006 policy.

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