The peril insured against is usually described in the policy in general terms, and it is practice of insurers with the view of qualifying their undertaking, to introduce exceptions which expressly exclude their liability where the loss is caused or the peril brought into operation by certain specified causes.
A. THE VARIETY OF THE EXCEPTIONS USED
The exceptions introduced by the insurers will vary in accordance with the type of insurance concerned, e g in the case of motor insurance there is often an exception stating that the insurers will not be liable where the vehicle is being driven in an unroadworthy condition; whereas in the case of personal accident insurance an exception is usually inserted excluding liability for death or disablement from disease.
B. THE EXCEPTIONS TO BE FOUND IN MOST TYPES OF POLICY
Certain exceptions, however, are to be found in almost every type of policy. They may be classified as follows:
1 Exceptions relating to particular causes which, though falling within the description of the peril in the policy, fall equally within the scope of a different species of policy.
2 Exceptions relating to causes for which the insurers are not prepared to accept liability.
3 Exceptions relating to causes which are not intended to fall within the scope of the description in the policy, but which may possibly do so on account of the general words in which the peril insured against is described.
4 Exceptions relating to the conduct of the assured.
1. Exceptions relating to causes falling within another policy
Exceptions of this sort exclude the liability of the insurers where the cause of the loss or of the peril coming into operation is itself a peril which is, in common practice, insured against by a different species of policy. Thus, in insurances against theft or damage to property generally, it is usual to except loss which is capable of being covered by a fire policy, in which case theft of the property insured or damaged during a fire is not covered.
Another type of exception excludes the liability of the insurers where there is actually in existence a policy belonging to a different species of insurance, which covers the loss. In this case a question of great difficulty arises if both policies contain the exception.
2. Exceptions relating to causes for which the insurers are not to be liable
There are certain causes which, though they may rarely occur, are calculated if they do occur, to bring the peril insured against operation and to cause losses of such magnitude that the liability of the insurers is, in consequence, likely to be increased far beyond what it would be in the ordinary course of business. The usual exceptions of this class relate to the following cases:
a. Foreign enemy.
b. Riot.
c. Civil commotion.
d. Military or usurped power.
e. Insurrection.
f. Hostilities.
g. Civil war.
(a) Foreign enemy
This phrase implies the existence of a war between the State of which the assured is a member and a foreign State. Whether a particular state of hostilities amounts to ‘war’ is a question of fact in each case.
(b) Riot
This word is to be construed in its ordinary legal meaning. It involves a tumultuous disturbance of the peace by three persons or more. Mere malicious injury to property done by three or more persons does not constitute a riot.
(c) Civil commotion
This phrase is used to indicate a stage between a riot and a civil war. It has been defined to mean an insurrection of the people for general purposes though not amounting to a rebellion. But it is probably not capable of any very precise definition. The element of turbulence or tumult is essential. An organized conspiracy to commit criminal acts, where there is no tumult or disturbance until after the acts, does not amount to civil commotion. It is not, however, necessary to show the existence of any outside organization at whose instigation the acts were done.
The words ‘popular rising’ in the phrase ‘civil commotion assuming the proportions or amounting to a popular rising’ have no recognized technical meaning and often mean the same as ‘insurrection’. Where there is a distinction, it probably lies in the greater spontaneity and looser organization of a popular rising. There must be some unanimity of purpose among those participating, and the purpose must involve the displacement of the government. It is doubtful whether a violent attack by one section of the population on the other on grounds e g of religion or race, would be described as a rising. The word ‘proportions’ is sometimes used to mean shape or configuration, but in the context of the phrase concerned signifies ‘dimensions’. One cannot identify precisely the dimensions of a popular rising. All that one can say is that it must involve a really substantial proportions of the populace, although obviously not all the population need participate, and there should be tumult and violence on a large scale.
(d) Military or usurped power
This phrase includes not only the acts of foreign enemies engaged in warfare within the realm or of subjects of the Crown engaged in external rebellion, but also the acts done by the forces of the Crown in repelling the enemy or suppressing the rebellion. So far as foreign enemies and the forces of the Crown are concerned, the application of the phrase calls for no detailed consideration. As regards civilian subjects of the Crown its application, however, presents difficulties. The phrase is ambiguous, and its meaning may vary according to the subject-matter to which it is applied. It clearly applies to an armed and organized rebellion, which has got to such a head as to be under authority and to assume the power of government by making laws and punishing disobedience to them. The phrase, however, is probably not capable of being precisely defined. It may, therefore, be of wider application. At the same time there must be facts which justify the application of the phrase. There must be something in the nature of warfare, something which is more in the nature of war or civil war than of riot or civil commotion; and the persons taking part must be guilty of high treason. Further, there must probably be some kind of organization.
The usurpation consists of the arrogation to itself by the mob of a law-making and law-enforcing power which properly belongs to the sovereign.
(e) Insurrection
This word means a rising of the people in open resistance against established authority with the object of supplanting it.
(f) Hostilities
This word does nor refer to the mere existence of a state of war. There must be acts or operations of hostility, committed by persons acting as agents of an enemy government or of an organized rebellion, and not by private individuals acting entirely on their own initiative.
(g) Civil war
A civil war is a war which has the special characteristic of being civil, i e internal rather than external. The words do not simply denote a violent internal conflict on a large scale. A decision on whether such a war exists will generally involve a consideration of (i) whether it can be said that the conflict was between opposing ‘sides’; (ii) what were the objects of the ‘sides’ and how did they set about pursuing them; and (iii) what was the scale of the conflict, and of its effect on public order and the life of the inhabitants. It must be possibly to say of each fighting man that he owes allegiance to one side or another, and to identify each side by reference to a community of objective, leadership and administration. It does not necessarily follow that the objectives of all those on any one side must be identical but there must be some substantial community of aim which the allies have banded together to promote by the use of force. There need not always be only two sides, but if the factions are too numerous, the struggle is no more than a melee without the clear delineation of combatants which is one of the distinguishing features of war A desire to seize or retain the reins of state is not the only motive which can ever put the contestants into a state of civil war. There would be such a war if the objective was not to seize complete political power but to force changes in the way in which power was exercised without fundamentally changing the existing political structure. There would also be a civil war if the participants were activated by tribal, racial or ethnic animosities. It is possible to build up a list of matters which should be considered when deciding on whether internal strife has reached the level of civil war, e g the number of combatants, the number of military and civilian casualties, the amount and nature of the armaments employed, the relative sizes of the territory occupied by the opposing sides, the degree to which the populace as a whole is involved in the conflict, the extent to which each faction purports to exercise legislative, administrative and judicial powers over the territories which it controls.
3. Exceptions interested ex abundant cautela
Such exceptions are in many cases unnecessary, but are inserted for the purpose of placing the intention beyond doubt.
4. Exceptions relating to the conduct of the assured
These also may include the conduct of persons for whom the assured is, or is deemed to be, responsible.
C. THE CONSTRUCTION OF EXCEPTIONS
Since exceptions are inserted in the policy mainly for the purpose of exempting the insurers from liability for a loss which, but for the exception, would be covered by the policy, they are construed against the insurers with the utmost strictness. It is the duty of the insurers to except their liability in clear and unambiguous terms.