Insurers first job when a claim is made is to see how they can avoid paying out. This is the same for any type of insurance. Do not believe that insurers are there and happy to assist you when there is a claim to be made.
The case below is a prime example. The insurers were no doubt only too happy to accept the huge premiums for the insurance. When however there was a claim, they tried to snake their way out of it.
Luckily, the court saw common sense to the detriment of the insurers. However, no doubt the insurers will simply raise premiums to cover their losses.
Insurance disputes in respect of whether a vehicle is or is not a write-off following an accident are sadly familiar to thousands of motorists. However, one High Court case involving a catastrophic fire on board a ship with an insured value of $12 million showed that such disagreements are not confined to dry land.
The vessel was fully laden and sailing in the Red Sea, off the coast of Egypt, when a blaze took hold in her engine room. Her owners gave notice to her machinery and hull insurers of their intention to abandon her on the basis that she was beyond economic repair and a constructive total loss.
A number of insurers, who had together underwritten 85 per cent of the risk, did not dispute that the fire was an insured peril and that the owners were entitled to be indemnified against their loss. However, in disputing the value of that loss, they insisted that the vessel was not a write-off.
Ruling in the owners’ favour, the Court noted that different repair yards had given radically different estimates of the cost of repairing the vessel. However, when the costs of salvage, towage and other expenses were taken into account, the Court was satisfied that the vessel was a total loss.
The ruling meant that the insurers had to indemnify the owners in accordance with the percentages of risk each of them had taken on. The owners were also entitled to be compensated for the reasonable costs incurred in seeking to avert or minimise the loss. Pursuant to an increased value clause in the relevant policy, the lead insurer was required to pay an additional $3 million.
