Case Study 2 – A heating supply and installation company
A heating supply and installation company, Arc, with a long history for client satisfaction and installation safety was sued by a customer’s insurer. Their customer’s business had suffered a fire allegedly caused by the heating company’s negligent installation of its product, and its insurer was seeking to recover its substantial loss from the heating company.
Arc was properly insured at all times through a reputable local broker. The broker had recommended changing insurers at the renewal prior to the date of the customer’s fire, to take advantage of a lower premium. The claim was presented to the new insurers but was refused on the grounds that the claim, they alleged, should have been made against the previous insurer. On approaching the previous insurers they also declined on the grounds that they were not “on risk” at the time of the claim. Lawyers were engaged by Arc and a three-year bitter legal dispute ensued about the meaning of the words in the policy. It resulted in putting the business at risk of bankruptcy if the matter proceeded to trial, without insurance, something that that was just weeks away.
The matter centred on the meaning of “loss, damage and claim” and each policy had a different definition. At the last minute before trial the broker sought our advice; we were able to negotiate a compromise settlement involving the claimant insurer, both insurers of Arc and its broker. Arc was saved from bankruptcy and a trial was avoided.