Insurance Disputes

Insurance is supposed to provide peace of mind but cover can be withdrawn or reduced because an insurer claims that a particular exclusion has been engaged or a condition of the policy has not been complied with.

The unexpected loss of cover can put companies and individuals in a difficult position where they might have to choose between using their resources to cover losses which were supposed to be insured or challenging their insurer’ withdrawal of cover.  We have dealt with cases where a claim against a policy has been accepted by an insurer only for cover to be withdrawn perhaps as a result of input from a loss adjuster or underwriter or as new facts about the claim have come to light.

Understanding your policy including the scope of available cover and the meaning of any exceptions or conditions is the first stage of dealing with an insurance dispute. If you are a small business or private individual, then you may be able to make a complaint to the Financial Ombudsman Service (FOS). Although the FOS does not have jurisdiction to award legal costs against insurers who have unreasonably withdrawn cover, we can provide ad hoc support to clients who have brought their own complaints after exhausting the insurers’ own complaints procedure or made complaints on their behalf where the amount of losses do not justify our full involvement.

We have also been instructed by larger businesses to file applications in the High Court for a declaration as to the extent of cover available under a policy or whether a particular condition or exclusion may be relied upon to justify the withdrawal of cover. In one case, we simultaneously brought a claim against the insurer to establish that it should cover a claim and assumed responsibility for conducting the defence to a product liability claim that had been brought against our client.

How can we help you?

• Reviewing the terms of the policy and considering whether any exceptions or limitations have been engaged.
• Drafting and pursuing a complaint under your insurer’s complaints policy;
• Preparing and submitting complaints to the FOS on behalf of small companies and individuals and dealing with any submissions by the insurer.
• Preparing and issuing applications in the High Court as to the meaning of the policy, the extent of cover and whether the insurer can withdraw a claim.
• Taking over the conduct of litigation which was previously funded by your insurer before cover was withdrawn.

Recent Successes:

1. Acting for the owners of a commercial property who found themselves underinsured in respect of losses arising from business interruption and property damage following a fire, which resulted two deaths. We made a successful complaint to the Financial Ombudsman to secure funding for our client’s legal representation at an inquest into the fire and concluded a substantial settlement of the client’s professional negligence claim against the broker at mediation without the need to issue proceedings.
2. Defending a component manufacturer in a substantial product liability claim. The claim arose from the supply of defective gaskets used in electrical transformers that were a component in radiotherapy machines. After the client’s insurer withdrew cover, we obtained a stay in the proceedings that had been brought by the manufacturer of the transformers and commenced proceedings for a declaration that the client’s insurance cover had been wrongfully withdrawn. Both claims settled simultaneously at mediation with a payment being made by the client’s insurer to the manufacturer of the transformers.
3. Acting for an individual facing a claim by his insurer for the reimbursement of monies that had been paid to settle a substantial personal injury claim following an accident in which his daughter had crashed a car whilst driving unsupervised with just a provisional licence. The case settled for one-tenth of the sum claimed on the basis that the insurer could have refused to make certain payments to the injured party.
4. Providing advice to litigants whose claims are funded or part-funded by litigation insurance. We have been able to use the threat of engaging the insurer’s complaints procedure or making a claim to the Financial Ombudsman to challenge the arbitrary limitation of cover and proposed payment arrangements which would have placed an unacceptable financial burden on our client to fund litigation upfront.
5. Assisting an insurance broker to defend negligence proceedings that had been issued in Northern Ireland by a former client. The former client was a construction contractor whose Liechtenstein-based insurer had become insolvent and was unable to compensate one of the former client’s employees who had fallen from scaffolding. After arranging to file a defence based on jurisdiction and the client’s own knowledge of the insurer’s financial position, the parties agreed a settlement.
6. Representing the owner of a company which inadvertently sold counterfeit oxygen monitors to the NHS. The monitors functioned adequately but the client faced an investigation by Medicines and Healthcare Regulatory Authority. The client’s insurance did not cover the potential claim or investigation but the matter was brought to a conclusion following a period of negotiation with the regulator without the company or its directors facing any sanctions.
7. Advising a housebuilder in connection with its negotiations with the Building Safety Fund and property management companies regarding uninsured liabilities relating building remediation and the form of contract which the client has been asked to conclude with the Department for Levelling Up, Housing and Communities.  Part of our engagement involved managing exchanges of correspondence with an insurer for the block which had received a number of claims from leaseholders in relation to fire safety measures which were alleged to be defective.

Alexander Haddad is a Legal Director in the Commercial and Property Litigation department who has an interest in insurance disputes and has acted for a number of clients whose insurers have withdrawn or limited cover.  Alex would be happy to discuss the background to any dispute and how we would can help.