17 March 2020

Keep an eye on the detail

The detail of insurance documents

The importance of reading the detail of insurance documents, rather than relying on conversations surrounding their contents, was brought home by of one of Hefin Archer-Williams’ clients when he was told that he was not insured following a catastrophic fire at his premises.

Hefin acted for a multimillion-pound manufacturing company following a fire in which its factory units were burnt to the ground. The client immediately advised its insurance brokers and its principal client of the fire. Following these conversations, it made the decision to find alternative premises, purchase equipment and ensure that it met its contractual obligations, in the belief it was fully insured. The company pulled out all the stops to save its business and the jobs of its employees.

The insurance claim

The insurance claim continued in the background, until a seemingly innocuous conversation, at which our client’s managing director was informed that the company was not insured due to his failing to provide disclosure of a “minor” criminal offence, a number of years earlier.

Our client relied upon that which he had openly discussed with his brokers, namely that during frank conversations he had detailed his past. He did not, however, read the detail of the insurance documents when they were received, some many months later. Proceedings were eventually issued against the insurance brokers on the grounds that they had failed to obtain the appropriate insurance, having been repeatedly advised, in person, of our client’s previous issues.

About 20 months later, the case ended up at a lengthy trial.

The trail

At trial, our client, unfortunately, lost principally because it was determined that he had not read the insurance policy documents fully, as if he had he would have seen, notwithstanding what he believed he had said, that they did not contain a reference to his criminal past.

He, like many, relied on what he had said, which he thought would be reflected in the insurance policy document, rather than reading the detail it actually contained. The court found that it was those documents that formed the basis of the relationship, not what he had understood he had said to his brokers.

Hefin said: “It is vital to read through in detail what you are given by your insurance brokers/ insurance company or any professional because it is those documents that will form the basis of the instructions given and can later be relied upon. Fortunately for our client, due to the actions he took to save his principal contract immediately following the fire, his customer worked with him to protect him and he has ultimately been able to save his business despite the failed insurance claim”.

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About the Author
Hefin Archer-Williams, Partner (FCILEx), Head of Cardiff Office

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