Over Taylor Biggs

The duty to give notice of the claim was a condition precedent to the Insurer's liability to make payment under the policy, in spite of there being no clear wording in the insurance policy giving rise to a condition precedent setting out the notice requirements.

The case confirmed that you need to take care in complying with terms under an Insurance Contract because the relevant clause may amount to a condition precedent, even if it does not resemble one.

Sub-Contractors were working on a tunnel in Manchester.  The Insurers provided a combined liability insurance policy which covered Employer's Liability, Public Liability and Products Liability.

The insurance policy required "immediate written notice with full particulars of any occurrence which may give rise to an indemnity under the insurance".  The Insurer's liability was expressly conditional on the insured observing the terms and conditions of the insurance policy.

Work began in March 2004.   In that month there was a fire that caused extensive damage to the tunnels.   Notification was given of a possible claim in March 2007 when the Claimants issued Court proceedings, asking the Court for confirmation that they were entitled to be paid under the insurance policy.

The Insurers alleged that there had been a failure to give immediate notice of the claim and that this would need to be given before a payment out would be made under the policy.
The Court found that on the facts of the case, notice should have been given possibly as early as April 2004.  On reviewing the policy terms the giving of notice was a condition precedent to a successful pursuit of the claim.   There was a "conditional link" between the duty to give immediate notice and the Insurers' duty to pay the claim.   The Insurer needed prompt notice of a possible claim in order to investigate who was to blame.

As in many cases reported on this website much of the Insurers' case was dependent upon the evidence given by witnesses.   Under cross examination it emerged that the insured had allowed its employees to give witness statements immediately after the fire and then forwarded documents relating to the work it had carried out at the location of the fire to the Main Contractor.   The insured also had been informed in October 2004 that some materials used in the project had failed fire performance tests.   It had also received a letter in January 2007 of notification that the tunnel owners were going to make a claim because of the fire.   The Judge found reason to doubt the credibility of the witnesses and this ultimately contributed to the failure of the claim.

It is therefore important that all levels of management are made aware that potential insurance claims become readily identifiable and that people know whom to contact in their organisation to decide if Insurers should be notified of a potential claim.   The establishment of a clear procedure for notifying potential claims within an organisation is sound policy.