Read the small print!

Posted: 7th July 2015

RCJInsurance small print can be tedious – but a failure to read and understand it can lead to policies becoming worthless and your premium a waste of money. In one telling case, an insurance company escaped liability in respect of a warehouse arson attack which caused £700,000 worth of damage.

Milton Furniture's warehouse in Ashby was set alight during the early hours of the morning by unknown persons. The premises’ general manager and a sub-contractor were sleeping in buildings attached to the warehouse and were awoken by the flames. The premises had been locked and checked by a security guard, but the burglar alarm had not been activated.

The company which occupied the premises launched proceedings against its fire insurers, Brit Insurance Limited, after they refused to pay out under the relevant policy. In dismissing the company’s challenge to an earlier ruling to like effect, the Court of Appeal found that it was a condition precedent of the policy that the burglar alarm should be armed outside normal working hours. The company had also persistently failed to pay invoices submitted by the firm which it used to monitor the burglar alarm system, with the result that that service had been terminated.

This is being hailed as an important decision for the insurance industry on the question of when liability can be avoided for unattended premises. Read your policy and ensure compliance.