Insurance recoveries - costs of fire damage
We act for the owners of a manufacturing company that suffered a catastrophic fire in one of its installations at the factory. We have been advising in relation to insurance recoveries and are taking forward a claim against the business’s insurance broker for losses valued at around £7m.
The claim is a classic professional negligence claim, an area in which we handle scores of claims at any one time in various sectors and against a variety of professionals.
In this case the costs of the fire damage should have been paid out by the company’s insurers. They should have accepted liability under the insurance policy within days and made an interim payment towards the company’s business interruption losses whilst it was unable to produce and sell its product. The particularly severe damage was to a particular installation that caught fire but the fire spread to other parts of the facility causing enormous damage. The factory was unable to make its product for sale, but continued to have a great deal of ongoing fixed operating costs.
Instead of accepting that the loss was covered, the insurance company’s loss adjusters asked a multitude of questions which resulted, after a few weeks, in an avoidance of the insurance policy. This left the company without any cover at a time when its equipment was destroyed. Trading losses on operating costs accumulated to a critical degree and it went into administration.
The company’s insurance broker had acted for the business over many years, yet the questions asked by the insurers related to information well known to the broker and which ought to have been dealt with by them. Had the brokers done their work properly the insurers should not have been able to avoid the insurance cover. We made a claim against the broker for professional negligence in placing cover for the manufacturer and in making the claim to insurers.