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ombudsman news

issue 4

April 2001

case studies - minimum security requirements

Many of the legal expenses complaints we consider involve employment or property disputes. The following is typical of the complaints we receive concerning property disputes.

04/21 household buildings - cover dependent on satisfactory survey - delay by insurer in arranging survey - whether policyholder prejudiced by cancellation of cover.
04/22 caravan - minimum security requirements - theft - whether theft linked to breach of requirements - whether insurer entitled to reject theft claim.
04/23 caravan - minimum security requirements - theft - whether policyholder's failure to secure caravan justified rejection of theft claim.

04/21
household buildings - cover dependent on satisfactory survey - delay by insurer in arranging survey - whether policyholder prejudiced by cancellation of cover.

Miss F had a mortgage valuation survey carried out in November 1998 before she purchased her rented property. The surveyor noted the presence of minor hairline differential cracking and a slight bulge in one wall. He concluded there was no indication of recent or continuing movement and suggested the most likely cause was historic bomb damage. Miss F telephoned the insurer asking for insurance cover. Policy documents were issued on 15 December, with the proviso "Cover is provided subject to a satisfactory building survey."

The insurer did not have the survey carried out for two months, but progressive movement was then identified and the insurer cancelled the policy. Miss F was dissatisfied and asserted that the insurer's delay in carrying out the full survey had prejudiced her. The insurer maintained that she was advised during her initial telephone conversation that cover was conditional on a satisfactory survey and it stated that the risk did not meet its underwriting criteria. However, it agreed to extend cover until May 2000. Miss F remained dissatisfied and sought compensation.

complaint upheld
It was not possible to determine whether Miss F was advised of the need for a full survey during the telephone conversation. Even if she was, she might not have acted any differently. She was clearly aware of the cracking and did not consider it significant. Moreover, she had the opportunity of cancelling the policy when she received confirmation of the proposal, highlighting the insurer's requirement. However, the delay in carrying out the survey was regrettable and the insurer's decision to cancel the policy meant Miss F would almost certainly be unable to find alternative cover.

The insurer accepted that its delay had prejudiced Miss F. It would now be extremely difficult for her to go back to her last insurer or to find another. We considered the insurer should reinstate the policy without conditions, which it agreed to do. However, we did not think there was any justification for awarding compensation in addition to reinstating the policy.

04/22
caravan - minimum security requirements - theft - whether theft linked to breach of requirements - whether insurer entitled to reject theft claim.

Mr J submitted a claim for the theft of his caravan and its contents. The insurer rejected the claim on the ground that he had not complied with the policy's security requirements. The caravan's storage facility did not have security lighting and the gate to the caravan park had been unlocked.

Mr J pointed out that he had fitted the caravan with a hitch lock and wheel clamp and that the park had some 25 other caravans. Although he accepted that there was no security lighting, he stated this was usual and that, in any event, lighting would not have deterred the thieves.

complaint upheld
There was no evidence as to whether the theft had taken place at night or in the daytime or whether the gate was open or merely unpadlocked. In the circumstances, we were not persuaded that Mr J's failure to comply with all the security requirements was linked to the theft. The ABI Statement says that insurers will not reject claims on the ground of a breach of condition unless the loss is connected with the breach. We therefore recommended that the insurer should meet the claim in full and it agreed to do so.

04/23
caravan - minimum security requirements - theft - whether policyholder's failure to secure caravan justified rejection of theft claim.

Mr S purchased a caravan on 20 June 2000. He took it on a trip on 10 July and brought it back on 13 July, when he left it at a friend's house for four days. He was aware that he needed to buy a wheel clamp and other accessories, but on 16 July, before he had done so, the caravan was stolen.

The insurer rejected Mr S's theft claim on the grounds that he had failed both to exercise reasonable care and to safeguard the vehicle, because it had no wheel clamp and was neither attached to a hitch post nor stored in a secure compound. Mr S explained that he had been about to comply with the insurer's requirements but the caravan was stolen before he could do so.

complaint rejected
Although the caravan had been left unsecured for only a short period, the policy endorsement applied regardless of the length of time. We were satisfied that Mr S knew which precautions he was required to take and had simply failed to secure the vehicle when he left. In the circumstances, we were satisfied that the insurer's rejection of his claim was justified.

ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.

The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.