Dealing with insurers following a loss can be an intricate business, involving detailed analysis of policy terms, so it is always wise to seek legal advice. In one case, a designer clothes company’s abortive claim against its insurers following a spate of thefts ran up more than £5 million in legal costs.
After one of its trusted employees stole large quantities of its stock over an extended period, the company sought over £1.4 million from its insurers in respect of business interruption. The insurers refused to pay and the company launched proceedings in a bid to make them do so. Its claim was, however, rejected by a judge.
In ruling on the company’s challenge to that decision, the Court of Appeal found that the judge had been wrong to find that, in failing to provide certain documents to the insurers’ loss adjusters so that they could assess the value of the claim, it had breached a condition precedent contained within the policy.
In dismissing the appeal, however, the Court noted that it had not been possible to reach any conclusions about the thieving employee’s modus operandi. The company had failed to establish that the loss it incurred as a result of each individual theft came to more than £5,000, that being the level of excess under the policy.