Insurers cover the carriage of an oil rig by sea. The policy excluded 'loss, damage or expense caused by inherent vice or nature of the subject matter insured'. During the voyage three of the legs of the rig broke off resulting from metal fatigue caused by the motion of the waves. The impact of a 'leg breaking wave' caused the final fracture. The weather on the voyage was within the range that could reasonably have been contemplated. The Supreme Court found that the cause of the loss was an insured peril, in the form of stresses put upon the oil rig by the height and direction of the waves encountered, rather than the 'inherent vice' of the legs not being capable of withstanding the normal incidents of the insured voyage. If that were the case, the cover would only extend to loss caused by the perils of the sea that was exceptional or unforeseeable and that would frustrate the purpose of all risks cargo insurance.

Global Process Systems Inc and another v Syarikat Takaful Malaysia Berhad

Supreme Court

Clarke, LJ, Collins LJ, Dyson LJ, Mance LJ, Saville LJ

1 February 2011