The Technical Stuff
Within this page we aim to highlight technical decisions and argument, gathering together information from disputed rulings, case law and FOS decisions.
Knowledge is key to protecting the insured's interests.
Warranty or Condition? Affirmation or Voidance?
Nobody likes to learn of warranties or conditions, 'post loss', but sadly, this is not an uncommon occurrence. So, at what point is it too late for an insurer to invoke its legal right in respect of conditions or warranties?
The law of contract does provide the insured with some protection in this area and specifically when such warranties/conditions are sighted late in the claims process. Breach of a warranty even if not material to loss may provide insurers with a right to void; however, in the case where an insurer is deemed through their conduct, to have affirmed the policy, such right will be lost.
Just such an incident came about in a fire claim at a fast food outlet. Insurers sought to exclude a £4,500 fume extraction system from settlement having earlier failed to secure proof that yearly duct cleaning had been undertaken; such cleaning being a warranty of the policy.
Insurers had already made an interim payment and had discussed values in respect of the above extractor; however, realising that no certificate had been presented in support of cleaning, insurers advised that they would not cover replacement of the item.
It was pointed out to insurers that their conduct, (making an interim payment), was such as not only affirmed the policy, but waivered any right to rely on the warranty. It was also put to insurers that the policy provided them with no other rights in respect of refusal to indemnify.
The case of 'Kosmar Villa Holidays Plc v The Trustees Syndicate' demonstrates the result of a failure by insurers to act in respect of policy conditions and places a firm responsibility upon insurers, requiring them to move swiftly if intending to rely upon conditions and warranties.
As always; should you have any questions re the above issue, just drop a line to: [email protected]
Their builder or yours?
Dealing with the value of a claim is just the start of things; arguably one of the most important matters is that of appointing a suitable contractor.
So... who chooses the contractor and what say does the insured have in such matters?
A policy will usually provide insurers with the option to reinstate or cash settle, but this doesn't mean that the insurer has a right to insist on which builder is to be appointed.
An insurers right to reinstate must be specifically provided for under the terms of the policy and even then, should insurers wish to rely on this right, they must make representations to this effect and do so within a reasonable time from the date of loss.
Insurers will often allow an insured to appoint their 'own' contractor and in some cases an insured may unwittingly fall into the position of doing so without actually realising it! By obtaining a quote and accepting settlement in that sum an insured takes on all responsibility for future works and will have no avenue for redress should their chosen builder fail to carry out works in a correct and professional manner.
So what should be done?
Appointing a known and trusted builder is usually the best way to proceed and for many property owners this is exactly what they do. But for the insured that has no building know-how or connections, it can be a minefield. There are a number of cowboys out there. Opting to allow insurers to reinstate may seem like a good idea but it would be wrong to think that this path will guarantee the quality of the work. Most insurers use subcontractors and the quality of their work can differ considerably.
As Assessors, we have long standing relationships with a number of trusted contractors and frequently appoint or introduce these persons to undertake repairs following an insured loss.
To learn more about appointing a suitable contractor, just ring our offices on: 01254 879 375.