I’m not sure if you answer general claims questions but if yes I would appreciate your views on a loss situation, very briefly as follows: the insured is suffering from damage to a generator due to ongoing vibrations.
The insured has effected repairs to the damaged rotor windings twice now but on both occasions has not determined a root cause and the vibrations continue. Consequently they have now instigated a BI claim against underwriters for ongoing ICOW electricity costs in excess of the 60 day deductible (MD costs are still within MD deductible).
Is this a so called aggravated BI loss against underwriters or is the onus on the insured to determine and remedy the root cause and therefore the ongoing costs fall to them?
Simon [surname and email provided]
This is a bit complex. It depends on reasonableness.
If the Insured was not aware it was a vibration issue from the start and rewound the motor(s) thinking reasonably that it was just a breakdown, then that one would, I suspect, be fine.
It then depends on how long the second loss followed. If it was a short period and they did nothing but rewire it again, I would think that the Insured would be expected to find the cause, remedy it and then repair it.
There is a condition in the policy that supports the insurer from a common law position, the condition being that the Insured ought to exercise reasonable care. I would refer you to Policy Condition 11, Precautions to Prevent Loss. Having said that, it is rare, but not impossible, for an insurer to succeed on this one.
I am assuming this is a claim under the Industrial Special Risk (ISR) policy due to the size of the time deductible you mentioned.
You then need to consider whether the exclusion for faulty design, faulty workmanship, faulty materials has any application and whether the consequential losses are as a result of the resultant damage or are as a direct result of the excluded event. This is under Perils Exclusion 4. (c) and (e).
There is also a broad exclusion about mechanical and electronic breakdown but this can be written out by endorsement.
Sorry, but this is quite a complex issue and not something that I could really provide a more on without a full brief or meeting to better understand the policy, the circumstances, timings etc.