Milton Keynes Borough Council v Michael Nulty and Others

Not reporting an accident in time to your insurer will land you in trouble

Many insurance policies stipulate in their terms and conditions that in the event of an accident, you should report this to your insurance company as soon as possible. This is so that they can investigate the circumstances surrounding the incident. Under these terms and conditions, the insurance company can deal with third parties directly and in any way they deem fit. That is, if they are prepared to accept responsibility for the claim.

If the policyholder breaches any of the terms and conditions of the policy, the insurance company can refuse to deal with any claims by the policyholder or by third parties.

In cases involving fire and water damage, the insurance company want to be involved as soon as possible. They often appoint loss adjustors who would attend the scene of the incident within hours of it being reported to them. They like to investigate the cause of damage, as in some cases it enables them to defend or argue for a reduction in the amount awarded.

In the case of Milton Keynes Borough Council and Michael Nulty, Mr Nulty was a self-employed electrician who had an insurance policy in place to protect him. Whilst he was working, a fire occurred and a lot of damage was sustained by the third party. Unfortunately Mr Nulty did not report the incident to his insurers straight away but instead reported it sometime later. A claim was then made by the third party and Mr Nulty then expected his insurance company to deal with it.

Mr Nulty‘s insurers argued that Mr Nulty‘s delay in reporting the incident to them seriously hampered any investigation they could do. They argued that there was a possibility that if they were notified in time they would have had time to investigate and look at other possible causes of fire. They argued that by not reporting the accident within a reasonable time, Mr Nulty had breached the terms and conditions of the policy and refused to deal with the claim.

The matter went to Court and there were two main issues to deal with. The first was whether Mr Nulty was responsible for causing the fire. On this issue, they decided that he was.

The other issue was whether Mr Nulty‘s insurance company should pay out for the claim, or whether Mr Nulty should be personally responsible for the damages. The Court held that whilst Mr Nulty had hampered any investigation, the insurers should not be able to avoid their responsibility under the contract. They ordered the insurers to pay 85% of the damages leaving the balance 15% to be paid by Mr Nulty. In a case running into millions of pounds, it left Mr Nulty owing a significant amount of money.

Hafezis Comments:
The moral of the story is that it is vitally important that you notify your insurance company as soon as an incident occurs. If you are a service provider such as an architect, surveyor or medical practitioner as soon as a complaint is received from a client/ patient that as a matter of rule you should notify your insurer of a potential claim.

For incidents such as fire/water damage or other accidents, again you should notify your insurers immediately. They can then appoint a lost adjustor to investigate the circumstances surrounding the incident. If evidence is lost, the insurers may be unable to properly defend the claim against you. If the Court takes a view that your actions hindered the insurance company by failing to report it, then you could be left with a situation like Mr Nulty of having to pay some or the entire third party’s claim. The peace of mind you thought you had bought when you took out the insurance would have been completely lost.

In all contract of insurance, whether it’s household contents insurance, car insurance or policies for professional services, there are always terms and conditions which they will insist you follow if you want to claim against the policy. Unfortunately for Mr Nulty, he found out the hard way. He was lest with a bill for 15% of a claim which ran into thousands of pounds.

If you are even in a dispute with your insurance company or any contractual dispute, you can get free advice by calling us on 0207 377 0877 we have a good record of successfully representing people in Mr Nulty‘s position.