Business Clinic: Can I dispute a denied storm damage claim?

Whether it’s a legal, tax, insurance, management or land issue, Farmers Weekly’s experts can help.

Russell Reeves of Thrings sets out how to challenge an insurance claim being denied.

See also: Business Clinic: How can we prepare for extreme weather?

Q. We had an insurance claim three years ago for storm damage to two sheds – one partly collapsed and structurally damaged and another suddenly dangerously close to collapse. The only safe option was to pull them down and rebuild.

The loss adjusters condemned everything, saying it was due to lack of maintenance that the sheds were in the state they were. However, that’s not correct. We strongly feel we are entitled to our insurance money and welcome any advice you can give.

A: Your contract with the insurance company will govern your relationship and the rules which apply to your claim.

Therefore, you will need to check the specific terms of your insurance to judge whether the insurance company has acted lawfully in denying the claim.

Your contract will be subject to some limitations under general contract law and insurance regulations.

There will also be legal duties imposed on you, for example, the duty of utmost good faith to provide honest and accurate information.

On checking your contract, you may find a term which imposes an obligation to keep your buildings in good repair.

If this term is in your contract, the insurance company may be legally entitled to decline cover on this basis.

However, it appears that you think the insurance company may be relying on this term without real merit.

The first thing I would suggest (if you have not already done so) is to write to the insurer setting out that the buildings were in good repair.

Any supporting evidence such as photographs or materials receipts will help.

This would likely amount to a complaint within their internal system to challenge this decision in the first instance.

You may challenge the loss adjusters’ conclusion, particularly how they could decide the buildings were in disrepair after storm damage had occurred.

You could get your own surveyor to offer an alternate opinion, although this will cost you money.

You may not feel this is necessary in the circumstances, or at least not until you have received an initial response to your complaint.

Should you not reach agreement with the insurer directly you may complain to the financial ombudsman, which helps individuals and small businesses with claims like this.

This will be cheaper than going to court and has a good chance of settling the dispute.

If there is still no agreement, you could consider taking the insurer to court for breach of contract.

You will want to check your contract in detail and highlight which terms the insurance company has breached by refusing to pay out.

You will also want to satisfy yourself that you have complied with all terms of the insurance. In addition, you need to check any dispute resolution clause which may govern how you take legal action.

Some contracts restrict your right to go to court.

It is important to note time limits. There may be a time limit to contact the ombudsman noted in a letter you receive from the insurance company.

However, even if you have missed the deadline, the ombudsman may still consider your case.

If you do wish to take court action, you will need to issue any claim within six years from the date of the breach of contract.

Should you need to pursue a claim, the first stage is to send a letter before action.

This is an important part of pre-action correspondence which will open a dialogue between you and the insurer to settle the dispute.

You may even reach an agreement before the need to attend court arises.

A solicitor will be able to help you draft this letter.

Given the complex nature of insurance disputes, I recommend you get legal advice to help you choose the right course of action.

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