The First Hall of the Civil Court, presided over by Mr Justice Mark Chetcuti, on July 1, 2015, in the case ‘Denis Xuereb v GasanMamo Insurance Ltd’, held, among other things, that the fact that an object was insured for a certain value did not automatically entitle the assured to that amount in case of loss. The assured had to prove the actual value of the lost object.

Denis Xuereb purchased a home insurance policy from GasanMamo which also insured a valuable ring. This ring was lost between January 30/31, 2010, during a reception at an apartment in Portomaso, St Julian’s. The insurance policy was still in vigore at the time.

During the reception, Xuereb went on the balcony to smoke a cigarette but his ring accidentally slipped out from his finger while he was putting out his cigarette.

The ring was insured for €43,000. As GasanMamo refused to compensate him, he proceeded to file legal proceedings for damages.

He requested the court to declare that the loss of the ring was covered under the insurance policy, to liquidate the compensation and to condemn the insurance company to pay him the sum liquidated.

GasanMamo disputed its liability. It said that, as Xuereb failed to take reasonable precautions, he had no right to compensation.

The company also contested the value of the ring and claimed that Xuereb was obliged to prove its value. The argument put forward was that the fact that the ring was insured for a particular amount did not automatically mean that the assured was entitled to that amount.

Besides, rather than pay monetary compensation, GasanMamo claimed that it could provide a replacement ring of similar value. It stated that it intended to order such a ring and deposit it under the authority of the court. It said that it would also request the court to appoint an expert to confirm that the replacement ring was sufficient so that it would offer it to Xuereb, in compensation, rather than pay an exaggerated amount.

The court noted that GasanMamo appeared to contest the quantum to be paid to Denis Xuereb, rather than its actual responsibility. In fact, it accepted its responsibility.

The court said that the insurance company failed to prove that Xuereb had failed to fulfil his obligation to look after the ring. There was no proof that the ring was lost as a result of Xuereb’s negligence, pointed out the court. It also resulted that Xuereb was wearing the ring at the time of the incident.

After losing the ring, Xuereb made every effort to find it. He sent employees the following day to assist in the search. A diver was engaged to search for the ring at the bottom of the marina.

Xuereb filed a report at the police station on January 31, 2010, and notified GasanMamo of the loss of the ring.

The court did not find Xuereb to be at fault for the loss of the ring. The ring was insured for use in Malta and Xuereb was not precluded from wearing it outdoors.

The fact alone that an object was insured on the basis of a declaration made by the assured, in the court’s opinion, did not give an automatic right to damages up to such value insured

He did not intend to throw his ring away. The fact that he was on the balcony was unfortunate but not an act of negligence.

The court noted that he made every effort to find the ring and, in this respect, he acted carefully and diligently, and merited compensation.

Damages: In ‘Carmen Camilleri v Middlesea Insurance plc’ it was held that the insured object had to be valued according to objective parameters at the time of the incident.

It was the duty of the assured to prove the value of the insured object at the time of the incident.

In a contract of insurance, the insurance company assumed the obligation to indemnify the assured for an eventual risk, which could occur beyond the control of the debtor and creditor (article 1053 of the Civil Code).

Utmost good faith was required from the assured. The insurance company had to be in a position to establish the premium in the light of all the circumstances of the case.

The assured had to prove the value of the object. The fact alone that an object was insured on the basis of a declaration made by the assured, in the court’s opinion, did not give an automatic right to damages up to such value insured.

On the basis of this value, the insurance company established the amount of the premium. Compensation was only due up to the value of the lost object.

The court considered that Xuereb did not produce the actual receipt of the ring, nor a proper description of the quality of the precious stones on the ring.

Xuereb managed to present a copy of an e-mail from the manufacturer to Sergio Zampa, the person from whom he had purchased the ring, giving the specifications of the ring, valued at €48,000.

The court noted that GasanMamo contested the value, as other jewellers valued a similar ring from another manufacturer between €12,000 to €23,000. As Xuereb, however, was not willing to accept a ring from a different manufacturer, the court felt that it was more appropriate in the circumstances for Xuereb to be paid monetary compensation. There was evidently a big discrepancy in values stated the court. The court said that it would not have had any difficulty if Xuereb had presented the receipt or an original description on the value of the object.

The burden of proof rested with Xuereb to prove what damages were suffered, pointed out the court, re: ‘GasanMamo Insurance v Keith Borg (App Inf)’ dated June 21, 2006.

The expert appointed by the court valued the ring with similar specifications to be €22,800 exclusive of VAT at the time of the incident in 2010.

The court maintained that the underlying principle was that the assured should be reimbursed for the loss suffered in order to reintegrate his patrimony.

The amount declared as the insured value was not always the real value of the object lost and the insurance company was obliged to pay for the loss which had to truly reflect the loss suffered by the assured, and which was not necessarily that declared by the assured.

The assured should not take advantage in order to make a profit.

The court felt that the amount established by its expert should be increased to strike a fairer balance between the rights of the insurance company and that of the assured.

For these reasons, on July 1, 2015, the First Hall of the Civil Court liquidated the compensation to thge amount of €25,000 plus VAT to be paid to Xuereb by GasanMamo.

Dr Grech Orr is a partnerat Ganado Advocates.