When
insurance
lets you down
I once acted for a client,
who’d just bought their dream
house and was carrying our
extensive conversion works to
it, whilst living crammed into
a nearby flat. An electrician
came to quote for installing
lights and whilst going down
some darkened stairs,
stepped upon a loose step, fell
and broke his arm in a number
of places.
Unfortunately, the client hadn’t taken
out any insurance to cover such an
eventuality, assuming that the workmen
doing the conversion works had an
insurance policy which would cover
this. It didn’t and as a result, just when
he found himself needing the money to
continue with the work, he was faced
with having to pay a substantial personal
injury claim, swiftly brought against him
by the electrician instead. The claim
settled once we were able to assess
the extent of the Claimant’s injuries and
financial losses and argue these down
to minimise any compensation paid
out but it took a couple of years. As a
result, the dream house never lived up
to its dream due to the reduced budget
and it was always tainted by the effects
of the accident. In hindsight, if he had
obtained an adequate insurance policy
at the start, things may have been very
different.
This tale is not uncommon and in the
past years we have seen a growing
number of businesses and individuals
seeking advice regarding insurance
claims where normally, they would be
turning to their insurers who would deal
with the claim instead.
Insurance
Whether you have for example,
employers liability or public liability
insurance attached to a business
or household policy, this will tend to
indemnify you in the event of a third
party claim made against you. As a
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business, this could be a claim from an
employee injured during the course of
his employment; or perhaps as a home
owner, circumstances similar to those
above. In such cases, once the incident
is reported to the insurer, they will pass
it to claims handlers taking the burden of
litigation off your shoulders.
Refusal to Indemnify
Under the terms of the insurance
policy, the insurer will require you to
report the incident to them as soon as
possible or within a certain number of
days, so that they can take steps to
protect themselves against the losses
increasing, minimising their financial
exposure. A failure to notify your insurer
within time may affect this and give
them the opportunity to argue that you
have breached the terms of the policy,
allowing them to withdraw indemnity.
Suddenly you find yourself alone and
“uninsured”.
Other reasons which the Court’s have
considered, resulting in indemnity
being withdrawn and the policy being
cancelled are a failure to co-operate with
the insurer in investigating the claim,
or making admissions of liability and
settlement offers without the insurer’s
agreement.
In another example, a workman set
fire to a property whilst using a heat
gun. When the employer reported the
inevitable claim against his business to
his insurer, his attention was drawn to a