Total Loss Claim Not Automatic In Piratical Seizure

This article was first published in Insurance Day on Friday 11 February 2011.

The Court of Appeal has reiterated that it will always be a question of fact whether an actual total loss can be said to exist in any given case.

In February 2010, the UK High Court ruled that capture by pirates does not automatically give rise to a total loss claim under a property policy. This decision was recently confirmed by the Court of Appeal (Masefield AG and Amlin Corporate Member Ltd (2011)).

The "Bunga Melati Dua" was captured by Somali pirates on 19 August 2008 while carrying a cargo of biodiesel owned by Masefield and insured by Amlin. On 18 September 2008, Masefield gave notice of abandonment of the cargo to Amlin. The vessel, her crew and cargo were released 11 days later on payment of a ransom.