Commercial claims involving injuries or fatalities

February 12, 2024

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By David Gear, Head of Major Loss, Scotland & Northern Ireland; Gary Wilson, Technical Director, Liability, UK

As major loss adjusters, one of the most significant aspects of our career is producing a positive outcome for all on a claim. In many cases, this means that the impacted business was returned to its pre-loss state with their insurance policy having responded and delivered without complications. On the flip side, there are downsides to working in this field. One being that we do handle claims that involve serious injuries and, at times, fatalities. During these unfortunate incidents, acting with empathy is essential. 

Whilst the insurance claim becomes a secondary focus, there is often a linked catastrophic effect on the insured business as a consequence of the incident. There could be significant monetary sums at risk with linked factors, such as job security for the insured’s workforce and, indirectly, to employees of those in their supply chain. The claim must still be prioritised and taken care of. 

In this blog, we’ll discuss how an injury or fatality affects the handling, timescales and progress of a major loss involving property damage and business interruption. We will also shed light on some of the issues affecting liability covers. 

Dealing with delays

In some cases, adjusters may not be permitted access to parts of the loss location until authorities such as the police, fire services, crown office and the Health and Safety Executive (HSE) complete their enquiries. This leads to significant delays in assessing the extent of damage, advising insurers of reserves, implementing loss mitigation measures and, importantly, undertaking enquiries required to consider policy liability such as compliance with applicable endorsements and warranties. Delays and linked denial of assessment/inspection of evidence can also hinder subrogation enquiries. 

One scenario that is all too familiar is when a government agency removes and retains a key item as evidence — say a machine which exploded — until their investigation and potential court case is complete. What this means for the claim is that the extent of the damage to the machine might not be known and also hindering the insurer who may needto understand why it exploded before they can confirm acceptance of policy liability. Similar considerations apply to CCTV footage showing the cause of damage and other critical policy liability information. The time period until the subject items are made available for inspection, if at all, can sometimes be several years. The issue to address is how the claim can proceed, as it’s often unreasonable for a policyholder to wait for the item or information to become available to insurers. 

Allowing insurers to make an informed decision on policy liability is the goal, but it’s not always achievable. As a result, they may experience a significant delay in the acceptance, increased property costs and losses or a diminishing business interruption (BI) Maximum Indemnity Period (MIP).

Managing media attention 

In some circumstances, there will be unwanted albeit not unexpected media attention on the incident. Direct approaches are often made to loss adjusters for commentary while on site. Loose comments and inaccurate press reports can appear, which cause confusion and sometimes paint a false impression on, for example, the circumstances of an incident, the housekeeping of the business and the cause of damage. At Sedgwick, our experts have experience handling losses of sensitive nature, including potential media exposure.

Whilst no one can foresee or should expect a claim to involve an injury or fatality, business interruption MIP’s should always be generous and allow for claims not always moving at the pace “normally” expected.

Considering cover 

Where cover for statutory defence costs features in the policy (and it typically does), it is imperative that policyholders benefit from the urgent instruction of a specialist solicitor. This specialist can support them in the face of statutory investigations and create a legally privileged framework, as well as the instruction of appropriate experts to examine and preserve evidence. This ensures that their position is protected relative to any potential prosecution, which could have serious financial and reputational repercussions for the business, and in extreme cases result in action taken against individuals under the terms of the Corporate Manslaughter and Corporate Homicide Act 2007. For that reason, when an incident of this nature occurs, it is no exaggeration to say that, other than the emergency services, a policyholder’s first call should be to their liability insurer.   

Somewhat frustratingly, after the insurer acts promptly to protect their policyholder, a clash between their interests may follow. This introduces a scenario whereby a solicitor whose fees are being paid by the insurer obstructs their ability to fully investigate and understand their policyholder’s liability in the event of a claim. This is borne out of the legal privilege curtain required to protect the policyholder’s investigation and ensure it can be conducted in an objective fashion without risk of its findings being used as evidence against them.    

In this scenario, it is necessary to work as closely as possible with the policyholder and solicitor to secure copies of factual documents that do not require protection from privilege, as well as any information that can be provided in the course of discussion. It is typically with the assistance of the solicitor — who will be in contact with the likes of the police and HS — that access can be obtained to evidence that has been seized during the course of their investigations.   

Early, critical actions aside, in the event of a claim that must be settled, it is to be expected that significant damages will feature, with some notable jurisdictional differences. Navigating these types of issues across the different classes of cover requires skilled and experienced adjusters. Sedgwick’s major loss teams have unparalleled capacity to support on a nationwide, multi-jurisdictional basis.     

Learn more > Contact [email protected] or [email protected].

Tags: accident, Business interruption, Claims, commercial, Commercial claims, injury, international, Major Loss, Property, Property claims, Property damage, UK, United Kingdom