An Insurance Working Example - Self-Induced Loss - Part I

Rankin Manufacturing Limited is a small company based in Coventry manufacturing vehicle

component parts and is covered by an ARPI policy with Industrial Risks Limited. On 5 August the claims manager of Industrial received a phone call from a director of the company indicating that the premises had burnt down that evening. What does the claims manager do?

- Normally the first step for the insurer, unless he retains his own in-house loss adjuster, will be to appoint an independent loss adjuster.

- The loss adjuster on talking to the police discovers that there are some

mysterious circumstances surrounding the fire.

- The insurer should then immediately instruct a forensic scientist.

Frequently, the insurer may leave the initial investigation to the police.

Unfortunately, although the police may commence the investigation enthusiastically, other more important demands may be made on their time and it is imperative that first class scientific evidence be obtained at the earliest possible date. Although, liaison with the forensic science laboratories has improved now that they have been privatised.

- The insurer should then inform both the forensic scientist and the loss adjuster that no reports should be written and any communication, temporarily, should be oral.

- The insurer should then instruct his solicitor who should immediately

inspect the site. From this time onwards, all reports from the forensic scientist and the loss adjuster should be addressed to the solicitor. Indeed, it would be wise for the solicitor to write to both the loss adjuster and the forensic expert stating simply that he has been appointed by the insurer to represent him in respect of the fire which appears to have been commenced under suspicious circumstances.

- The purpose of such a letter is to avoid the necessity of disclosing early

reports from the experts in the course of discovery in the litigation.

An Insurance Working Example - Self-Induced Loss - Part I

By: Willis J. Watson

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