MAY | FEATURE
policy sub-limits apply, and whether any
deductible is applied once or multiple
times.
How do I make a claim?
Insurance policies will set out what steps
an insured party need to take when an
actual or potential loss arises.
This should be complied with
carefully. In particular, any clause
identified as a ‘condition precedent’
or ‘warranty’ needs to be strictly
complied with as a breach will, in certain
circumstances, enable the insurer to
reject a claim without needing to show
that the breach caused loss. In particular,
insured parties should consider:
» Notification – policies will set out
what needs to be notified and when.
Typically, an insured party needs to
notify actual and potential losses,
with precise thresholds set out in
policies as to when this obligation
arises and how quickly notification
must be made. Insurers should be
provided with sufficient information
to understand the nature of the
(potential) loss.
» Submission of claim – to obtain
payment, typically an insured party
needs to provide a ‘proof of loss' to
insurers describing the nature and
amount of losses suffered, and how
they have been caused by an insured
event. Insurers may require further
information about the losses before
determining whether to pay a claim.
» Mitigation of loss – insurance only
covers losses which are fortuitous, and
therefore may not cover losses arising
from the insured’s mishandling of its
response to an insured event. Many
policies also impose express duties
on an insured to mitigate its loss. It is
important to understand at the outset
what the legal and contractual duties
are, and to ensure they are complied
with. In particular, insured parties
may need to preserve, or exercise,
contractual or legal rights they have
to recover their losses from third
parties.
Payment
The nature and scale of the outbreak
may result in serious cashflow issues for
certain businesses.
Where the relevant insurance policy
was taken out after 4 May 2017, there
is an obligation (under s28 of the
Enterprise Act 2016) for an insurer to
pay any claim ‘within a reasonable time’.
What is ‘reasonable’ is undefined
and uncertain, but relevant factors
in assessing this include the type of
insurance, the size and complexity
of the claim, compliance with any
relevant statutory or regulatory rules
or guidance and factors outside an
insurer’s control.
If an insurer fails to pay within a
reasonable time, an insured party can
claim damages for any loss arising from
the breach.
Therefore, an insured may have a
remedy if the delay caused additional
cash flow difficulties which affected
its ability to carry on its business. It is
possible to opt out of the Act in non-
consumer insurance, provided that the
transparency requirements are satisfied.
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