Jensen v ICWI: Cayman Court clarifies when claims against insurers can be made directly under section 15(1) of the Vehicle Insurance (Third Party Risks) Act

The Cayman Court’s decision in Jensen v ICWI (Cayman) Ltd [2026] CIGC (Civ) 4 confirms that the statutory obligation under section 15(1) of the Vehicle Insurance (Third Party Risks) Act – for an insurer to satisfy a judgment obtained against a negligent insured – does not apply when the vehicle involved has been sold and ownership transferred prior to the collision. In this circumstance, the new owner is not considered “insured” for the purposes of section 15(1).

Acting on behalf of the Insurance Company of the West Indies (Cayman) Ltd, Ogier successfully defended the claim that the statutory obligation under section 15(1) was not triggered. 

Case overview: Jensen v ICWI (Cayman) Ltd 

In February 2017, Mr Cruz purchased a vehicle from Mr Claxton, who held insurance with the Insurance Company of the West Indies (Cayman) Ltd (ICWI). Claxton did not cancel his insurance policy with ICWI, despite parting with possession of the vehicle and receiving the purchase price from Cruz in full.  

On 30 April 2017, Mr Jensen (the Plaintiff) was injured in a road traffic accident caused by Cruz's negligent driving of the vehicle. The Plaintiff commenced proceedings to recover damages from Cruz, which later settled. As Jensen was unable to recover the judgment sum from Cruz, he commenced proceedings against ICWI, seeking a declaration that ICWI was liable to satisfy the judgment obtained against Cruz, under section 15(1) of the Vehicle Insurance (Third Party Risks) Act (the Third Party Risks Act). 

Who is covered under section 15(1) of the Vehicle Insurance (Third Party Risks) Act? 

Section 15(1) of the Third Party Risks Act provides that if, after a certificate of insurance has been issued a judgment in respect of such liability covered by the policy is obtained by a third party against any person insured by the policy, then notwithstanding any entitlement to avoid or cancel the policy, the insurer shall satisfy the judgment in favour of the third party.  

Was Cruz considered a "person insured" under section 15(1)? 

Jensen claimed that: (i) Claxton and Cruz had entered into a sales agreement which included a condition that the sale would not be completed, or legal title to the vehicle transferred, until Cruz had obtained his own insurance policy and (ii) that, in the meantime, Claxton remained the owner of the vehicle and had granted a licence to Cruz to drive the vehicle as an "authorised driver" under his policy with ICWI, and as such, Cruz was a "person insured" under section 15(1) of the Third Party Risks Act.

ICWI contended that it was not obligated to satisfy the judgment because Cruz himself was not a person insured by ICWI. ICWI stated that while they had insured Claxton:

• the ownership of the Vehicle transferred to Cruz when he paid the purchase price in full and took possession of the Vehicle 
• Claxton had relinquished any insurable interest in the Vehicle as the policy had lapsed 
• Claxton was no longer able to authorise anyone to drive the Vehicle 

The Court’s decision in Jensen v ICWI (Cayman) Ltd 

The Court dismissed the Plaintiff’s claim and held that ICWI was not obligated to satisfy the judgment obtained by Jensen against Cruz because he was not a "person insured".  

Three questions were considered in order for the Court to arrive at this decision: 

1. When did ownership of the vehicle transfer from Claxton to Cruz?  

Ownership and possession of the vehicle had passed to Cruz before the accident. The parties intended that ownership would pass when payment in full had been received and Cruz took possession of the vehicle. Any intention to register the vehicle to Cruz at a later date when insurance had been obtained by Cruz was considered to be irrelevant.  

2. Did Claxton retain an insurable interest? 

The Court confirmed that Claxton did not retain any rights as an owner and / or any insurable interest in the Vehicle once ownership and possession had transferred to Cruz.  

3. Was Cruz an “authorised driver” under Claxton’s policy? 

As Claxton did not retain an insurable interest in the vehicle after parting with possession and ownership, it was determined that he could not legally authorise Cruz to drive the vehicle.  

Though unfortunate that Jensen was left with a judgment against an impecunious defendant, the Court confirmed that the statutory obligation under section 15(1) of the Third Party Risks Act is only valid where a judgment is obtained against a person insured.  

Key takeaways for policyholders and insurers 

This decision provides clarity on the scope of section 15(1) of the Vehicle Insurance (Third Party Risks) Act and confirms that it is not intended to create an unlimited obligation on the “last known insurer on risk” - nor does it operate as “an insurer of last resort” regime. 

This decision will be welcomed by the motor insurance industry of the Cayman Islands. It sends a clear message that policyholders cannot pass along the benefit of an insurance policy once ownership and possession is parted with. This is consistent with the widely accepted proposition that an insurer can only be expected to underwrite risk that it has assessed and accepted on a fully informed basis.

How Ogier can help 

Ogier acted for ICWI in this matter. Our specialist Insurance Disputes team acts in both contentious and non-contentious matters. Contact Farrah Sbaiti or Dunzelle Daker for more information. 

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Disclaimer

This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

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