Delaying notification of a claim nearly left a self-employed electrician completely uninsured following a blaze at a recycling centre.

Eventually he was found personally liable for 15{0a6a65c996ed4169444354e707b897cdb00dbefc1d0429e8febb9bf11027ba53} of the loss, some £300,000, leaving his insurers NIG to pay 85{0a6a65c996ed4169444354e707b897cdb00dbefc1d0429e8febb9bf11027ba53} of the £2 million policy limit.
Mr Nulty was working at a recycling centre owned by Milton Keynes Borough Council. The plant caught fire and was then damaged by a further fire that broke out the next day. The Council claimed that Mr Nulty had caused the first fire by carelessly discarding a cigarette.

Mr Nulty did not inform his insurers until 18 months later when the Council claimed against him for the damage to the plant. His insurers refused to pay on the grounds that his insurance policy had a condition that required immediate notification of a loss. They also argued that the fire had not been caused by Mr Nulty, but either by arcing from a live electrical cable or arson.

The case went to the High Court where, in two parallel actions, the judge had to decide whether Mr Nulty caused the fire and second whether his insurers could refuse to pay the claim due to late notification.

The court decided that the most likely cause of the fire was Mr Nulty’s discarded cigarette. It also found that Mr Nulty’s delay in notifying his insurers put them at a disadvantage as they could not properly investigate the cause of the fire. While the judge decided that the insurer remained liable for the claim, it decided that Mr Nulty had to pay for 15{0a6a65c996ed4169444354e707b897cdb00dbefc1d0429e8febb9bf11027ba53} due to his late notification. The decision about who had caused the fire was appealed, with the Court of Appeal upholding the original decision in January 2013.

“This shows just how vital it is that people inform their insurance companies in the event of a claim as quickly as possible. All professionals could easily find themselves in the position where the insurer refuses coverage or they are required to contribute to any claim settlement in the event of late notification,” said James Burgoyne, Director, Brunel Professional Risks. “Any claim or circumstance should be reported immediately. At Brunel, we help our clients to manage claims and promptly inform insurers as it puts them in the best possible position to successfully defend any claim.”

The details of the Nulty case have been reported by Kennedys and Law Now.