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Contractors: Align Your Contractual And Your Covering Insurance Obligations

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28/11/2012

When a serious fire damaged a processing plant, the owner brought a claim against a company that had been carrying out ‘hot works’ just prior to the fire.
 

 

hlw Keeble Hawson LogoThe contractor denied liability but, in the event that it was found liable, sought an indemnity from its insurers.

The insurers in turn denied that they were liable, arguing that the contractor had breached the terms of its insurance.

Because it had taken reasonable and necessary precautions to prevent fire, the contractor was found to be not liable for the fire. This turned out to be just as well for the company concerned because the court agreed that it had breached the terms of its insurance policy, which contained a different set of criteria that had to be observed, so the insurers would not have been liable under the policy. This would have left the contractor to carry the entire cost of the damage caused by the fire.

Michael Peacock, Partner in hlw Keeble Hawson’s Dispute Resolution Team commented that “This case demonstrates how important it is to ensure that your obligations under your insurance policy are reflected in any contract with a customer.” 

Please contact Michael Peacock on 0114 2906 287 or michaelpeacock@hlwkeeblehawson.co.uk if you want further information on this or any other legal issue on the terms of your insurance policy.