Transcript Chartered Institute of Loss Adjusters Junior Conference

CILA Junior Conference 2012
Legal Aspects
Charis Beverton
DAC Beachcroft
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DAC Beachcroft is a leading international legal business with more than 2,000
people and coverage across the UK, Europe, Asia-Pacific, Latin America and North
America.
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We provide a full-service claims, commercial, risk, advisory and transactional
capability.
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We work with clients in a select range of industry sectors and are market leaders
in health, insurance and real estate.
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Loss adjustors are key for insurers, claim management companies and lawyers.
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Loss adjustors can be the first on the scene, first to access data and first contact
with insured, third parties, officials etc.
Coverage
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Key question
What are terms of the policies?
What does each policy cover?
What is specifically excluded?
What conditions or condition precedents are there? Are there any warranties?
- Are there any listed building exclusions / conditions?
- Is there an unoccupancy condition in the policy which may affect Jamal’s
right to claim?
- Has Sarah disclosed that Brian is living with her?
- Does Mangit and Iftikar’s policy prohibit them from keeping fireworks?
What is the limit of indemnity?
What has actually been lost? What damage has been suffered.
Which policy will cover which loss? Do we have any double insurance
considerations here?
Is the extra festive season stock covered?
Proximate Cause
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Dominant cause / real cause of loss
Is that “real cause” covered?
Have there been any intervening events?
Was the machine defective? Is this a known and / or common defect?
Did Jon negligently install the machine?
Was Jon authorised and / or qualified to install the machine?
Did Sarah contribute to the loss by failing to deal with the small pool of water?
Did Jamal’s absence significantly contribute to the damage / loss?
What effect, if any, did Mangit’s delay in dealing with the trickling water have on
the damage / loss?
Insurable Interest / Noted Interest
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The insured must have an interest in the subject matter of the insurance policy
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Is it foreseeable that damage to the property would affect Sarah, Jamal and
Mangit as well as Nelson Properties (St Albans) Ltd? All are noted on policy
therefore answer should be yes. However, what about Brian and Iftikar? Is it
foreseeable that Brian and Iftikar would suffer financial loss as a result of the
insured event? Which policy would respond?
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What is the status of dependent children?
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What is the difference between co-insureds and those who have a noted interest?
Is there really a difference in practice?
Mitigation
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Insured must mitigate its loss
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Building: independent quotes obtained? All repair work necessary? Only one
estimate obtained so far.
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Contents: Christmas presents? Any ability to replace in the sales?
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Stock: What stock is being held over from Christmas / New Year? How soon can
suppliers be diverted?
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Rent: will Nelson Properties (St Albans) Limited lose any rental income? Will
Brian Stein pass any loss of rental income on to Nelson Properties?
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Break clause: would it be sensible for Mangit and Iftikar to exercise the break
clause?
Business Interruption / Increased
Costs of Working
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How much interruption has their been to the newsagents?
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Is it possible to set up at the front of the shop in the interim?
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Would new premises have to be found until the building work is completed?
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What associated costs might there be, legal, staffing, stationary etc?
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Will additional staff have to be found to assist Mangit and Iftikar whilst repairs
are being carried out? Will they have to find alternative suppliers? What about if
they had had to replace any specialist items?
Subrogation
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Who could ABC or XYZ recover from?
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What problems might there be?
- Does Mark Rowlands Ltd v Berni Inns Ltd [1985] 3 ALL ER 473 apply? Could Sarah
be liable here?
- Do Comry’s owe either a contractual or tortious duty of care? If so to whom? Does
the duty extend to Nelson Properties, Brian Stein, Mangit and Iftikar? Do we need
to consider potential assignment?
- Was Jon Bonham authorised to install the machine? Would he have professional
indemnity insurance to cover this? Does Comry’s professional liability insurance
cover these types of situations?
- If Jon Bonham was stepping outside his normal duties and abilities, and he is
uninsured, what are the likely prospects of recovering against him? Is Jon Bonham
an independent sub-contractor?
- If not, and Comry’s is vicariously liable but uninsured, will they be able to meet
the liability?
- Is this a defective product? If so who is the manufacturer? What special
considerations are there with defective products?
Utmost Good Faith
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There must be full disclosure of all material facts which might influence the insurer when
deciding whether to provide insurance to the insured.
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Non-disclosure must be material and have induced the insurer to write that risk
(Section 18 (1) Marine Insurance Act). Leading case still Pan Atlantic Insurance Limited v
Pinetop Limited (1994) 3 WLR 677
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Test is
- Objective and
- Subjective
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Non disclosure will void the insurance contract ab initio.
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Duty on insured at formation of contract and at every renewal. The insured must disclose to the
insurer, before the contract is concluded, every material circumstances which is know to the
insured, and the insured is deemed to know every circumstance which, in the ordinary course of
business, ought to be known by him. If the insured fails to make such disclosure, the insurer
may avoid the contract.
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But Consumer Insurance (Disclosure and Representations) Act 2012
changes this rule for consumer contracts. Consumers now have a duty to
take reasonable care not to make misrepresentations. An insurer has a
remedy against a consumer for misrepresentation only if the
misrepresentation has been made in breach of the duty to take reasonable
care and if the insurer shows that without the misrepresentation they
would not have entered into the contract (or agreed to the variation) or
would only have entered into the contract on different terms.
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The CI (DR) Act 2012 gives effective to the three part classification used
by the Financial Ombudsman Service:
- Where a misrepresentation is honest and reasonable the insurer has
no remedy and must pay the claim
- Where a misrepresentation is careless, the insurer has a
compensatory remedy.
- Where the misrepresentation is deliberate or reckless, the insurer may
treat the policy as if it does not exist and decline all claims.
CILA Junior Conference 2012
Legal Aspects
Charis Beverton