A failure to strictly comply with the small print of insurance policies can render them worthless in the event of a claim. However, in one case, lawyers representing the owner of a waste processing plant succeeded in convincing the High Court that insurance cover had been wrongly withheld following a devastating fire.
The underlying cause of the blaze was a faulty conveyer belt bearing. The fault had been reported to the belt’s manufacturers, who had sought to resolve the issue, and the bearing had twice been replaced by the plant’s owner. Following the fire, however, the plant’s insurers refused to indemnify the owner against its loss.
In granting the owner a declaration that the insurers were bound to pay out under the policy, the Court rejected arguments that the owner had failed to comply with the policy’s requirement that no combustible materials should be stored within six metres of fixed plant or machinery outside working hours. The insurers’ arguments that there had also been a failure to maintain the conveyer belt properly, or to arrange for adequate cleaning of the site at the end of the day, were also rejected.
In accepting the explanation for the fire put forward by the owner’s expert witness, the Court found that a build-up of combustible material in proximity to the faulty bearing had been the accidental consequence of the fault itself. No such material had been stored with a six-metre radius of the belt. The owner had a good system of housekeeping in place and the fact that the bearing failed did not lead irresistibly to the conclusion that the belt had been inadequately maintained. The sum payable by the insurers in respect of the fire damage remains to be assessed.