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Court dismisses appeal against payment of N17m insurance claim

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The Court of Appeal, Lagos division has dismissed the appeal filed by Great Nigeria Insurance (GNI) Plc against the decision of a Lagos High Court, which ordered it to pay N17 million insurance claim to its customer, Zeal Trust Limited.

The firm had sued the appellant at the lower court, in suit marked LD/1776/2011, claiming that the defendant/appellant’s repudiation of its claim under the contract of insurance was unlawful.

It argued that it amounts to a breach of duty to indemnify the claimant under the contracts and thereby entitled the claimant to the claimed damages.

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It prayed for N22.5million as special and general damages suffered as a result of the breach of duty by the defendant under the contract of insurance between them as well as 15 per cent interest yearly from the date of judgment until final liquidation of same.

In her judgment, Justice Folashade Bankole-Oki held that the claimant on the balance of probabilities had proved it claims substantially under the two insurance contracts it entered with the defendant and awarded N15million for the commercial vehicle insurance policy and N2.3million for the Goods-in-Transit insurance policy.

Dissatisfied with the judgment, the defendant filed two notices of appeal containing a combination of 17 grounds and particulars, arguing that learned trial Judge erred in law by failing to give effect to the mandatory provision of Section 50(1) of the Insurance Act CAP 117 Laws of the Federation of Nigeria 2004 on the invalidity and non-enforcement of insurance contracts which are devoid of advance payment of premium, prior to the commencement of the insurance contract.

The appellant among others argued: “The learned trial Judge erred in law by refusing/neglecting to follow the authoritative and binding decision of the Superior Court on mandatory advance payment of insurance premium as the condition precedent for a valid contract of Insurance.

“The learned trial Judge erred in law by holding the Motor Vehicle Insurance and Goods in Transit Insurance contracts as enforceable on account of the respondent having fully paid the premium before the robbery incident.

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But a three-man panel of appeal court justices in a unanimous judgment delivered by Ebiowei Tobi upheld the decision of the lower court.

The court held that the appellant cannot escape liability under the insurance cover, policy or contract simply on the ground that the premiums for the commercial vehicle insurance and the goods in transit insurance were not paid as at when the contract was entered.

“I have held that based on the agreement between the parties, once the premiums were paid before the risk insured happened, the appellant is under obligation to honour the insurance policy. I have also held that the respondent did not prove special damages and therefore not entitled to special damages.

“Based on those findings, it is important to state in clear terms that since the respondent could not prove special damages, it is not entitled to such but however the respondent is entitled to the insured amount of the Mercedes Benz Tanker under the commercial vehicle insurance policy and the loaded diesel under the Goods in transit policy.

“The insured amounts under the commercial vehicle policy is N15, 000,000 and the amount under the Goods in transit policy is N2, 296,000. This, the respondent is entitled to as the appellant cannot escape liability for the insured risk,” the court held.

Justice Tobi stated that insurance contract are entered to indemnify the insured against any risk which if occurs, the insurer will pay the amount agreed in the policy.

The business of insurance, he said, is built on trust and therefore insurance companies must not abuse the trust.
“The insured parts with money to the insurance company trusting the company that provided premium is paid, should anything happen to the insured property the insurance company will indemnify the party.

“The party parts with money as premium even when there is no damage to the insured item for the period. This is painful to the insured when money is leaving his account and the insurer is smiling and praying that nothing should go wrong. Should anything go wrong provided the premium is fully paid, the insurer is under a moral and legal duty to indemnify the insured.

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“This is where the insured smile and the insurer begin to look for reason not to honour its own part of the bargain or agreement in the policy. For the appellant and indeed insurance companies, it is win some and lose some.

“The appellant must be alive to its responsibility to go the path of honour whenever the risk occurs. It is irresponsible for an insurance company to collect full premium before the risk occurs and then look for reasons not to indemnify the insured.

“No legal system should allow such acts. While a court should accord the insured that right to be indemnified, no court should also deny the right to the insurance company to be paid premium before the occurrence of the risk insured.

On the whole this appeal lacks merit and it is dismiss. The judgment of Hon. Justice Bankole-Oki (Ms) of the Lagos High Court in Suit NO: LD/1776/2011- Zeal Trust Limited vs Great Nigeria Insurance Plc is affirmed,” he declared.

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