Absence of Warranty Details in the Policy Contract

Settlement by Case Manager

Terms and Conditions not stated in the Policy Documents.

 

Background

Ahmad, a contractor, stored his cables within a completed unit that was secured by a sliding shutter. Unfortunately, there was a break in and the cables were stolen. Ahmad referred the matter to us when the Insurer denied his claim on the grounds of non-compliance of “Special Conditions Concerning Theft Prevention and Security on Construction Sites Warranties.”

 

Investigation and Key Findings

From the review of the Policy Documents provided by the Insurer, we note that the “Special Condition Concerning Theft Prevention and Security Sites Warranties” heading was listed on the Policy Schedule but the full wordings including the five (5) conditions (as stated below) quoted in the letter of repudiation was not stated anywhere in the policy documents provided. 

“Theft Prevention and Security on Construction Sites 

It is hereby warranted that during the currency of this Policy, all locations, buildings, premises or areas on the Insured Construction Site(s) that are occupied or utilised as stores/warehouses or open storage areas are provided with the following measures, and which measures are kept in good operational condition at all times:

1. Protection by watchmen/security guards who are to be in attendance on a 24-hours a day basis including during Public Holidays, with patrol rounding being carried out at regular intervals

2. Communication facilities be provided to the watchmen/security guards that are at least capable of allowing the watchmen/security guards to make external calls to the emergency services (including the Police) as well as to the Insured's Management Personnel

3. Perimeter fencing is provided with minimal entrance and exit gates with all security guard posts at all such entrance and exit gates

4. Entrance to all store-houses, store-rooms, warehouses, cabins out-buildings or other such enclosed structures which are utilised for storage purposes, are adequately and properly secured and locked all times other then when opened for loading and unloading activities only

5. Adequate lighting, including flood lighting to open areas, is provided during the night Subject otherwise to the terms, conditions, provisions, exclusions and exceptions of the Policy”

 

We requested clarifications from the Insurer and whether there were other documents where the above conditions were clearly communicated to Ahmad.

The Insurer confirmed that the details of the warranty was only verbally informed to Ahmad, but they had no documentary evidence to support their contention.

 

Settlement

We highlighted to the Insurer that verbal communication of warranties can be disputed and is not in line with “best practice” standards of an insurance contract.

Based on our findings, the Insurer agreed to revise their decision and paid the claim. This was accepted by Ahmad and the matter was resolved.