Insurer Failed to Include Definition on Sinking,Subsidence and Landslide in the Policy Document

Song Ki’s excavator had sunk and damaged. The Insurer however, turned down his claim as “sinking” was excluded under the Mobile Plant and Equipment Policy.

 

Investigation and Key Findings

We perused Song Ki’s insurance contract and came across the policy endorsement on “Subsidence and Landslip” .

However, we noticed that there was no policy definition of the term Sinking, Subsidence and Landslip in the policy contract.

We requested the Insurer to provide their underwriter’s definition of the following terms and received their reply.

“Sinking” means – go down below the surface- become submerged

“Subsidence” means – the process by which an area of land sinks to a lower level than the land surrounding it

“Landslip” means – a mass of rock and earth that falls down a slope, usually smaller than a landslide

 

Settlement

The absence of policy definition can invoke the “Contra Proferentum” rule in favour of the complainant.

The policy included the “Subsidence and Landslip” Endorsement which among others confirmed coverage for loss or damage caused by subsidence.

The Underwriter’s definition of subsidence i.e., “land sinks to a lower level than land around” which was not stipulated in the policy contract, matches the circumstances which caused the sinking excavator experienced by the complainant

Based on our observation, the Insurer has honoured the claim.