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Zagora Management v Zurich Insurance: Timing in Property Insurance Claims

  • Legal Development 15 March 2019 15 March 2019
  • UK & Europe

  • Insurance & Reinsurance

Judge considers how long insurer has to consider a property insurance claim

Zagora Management v Zurich Insurance: Timing in Property Insurance Claims

A property insurer was ordered to provide an indemnity under its policy. In this case, the judge considered various costs issues, one of which was the date from which interest should be awarded. The policy in this case was issued before the late payment damages rule came into effect (for policies written on or after 4th May 2017). Nevertheless, the case is of interest because the judge took into account how long the insurer had to investigate the claim (a point which would be relevant to cases in which late payment damages are claimed – since an insurer must pay any sums due in respect of a claim made by the insured "within a reasonable time" (which will include a "reasonable time" to investigate and assess the claim)).

The basic rule is that the insured is entitled to interest from the date it is kept out of money which is due to it (and this is not based on fault or the wrongful withholding of payment by the insurer), but that an insurer is entitled to a reasonable time to investigate the claim (both as regards liability and quantum) (see Kuwait Airways Corporation v Kuwait Insurance Company [2001]).

The claim in this case was first submitted on 13th March 2013. The insurer investigated and at a meeting on 27th June 2013 the insurer agreed in principle to a resolution. The insured claimed that interest was therefore due from 27th June 2013 onwards. The judge rejected that argument, though, because at that time there had been no agreement as to the costs of the necessary remedial works. However, nor did interest only start to run from the date the final account was submitted by the contractor. On the facts, the judge concluded that interest should be awarded from 7th August 2013 onwards, ie 4 months from the date of the initial notification.

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