In this insurance fire claim judgment, the insurer became suspicious of the fire after discovering that the insured’s claim was its fourth fire loss claim against an insurer.
The insurer sought documents including financial records, tax statements and banking information and records of improvements made to the property.
Many months passed without receiving documents from the insured with six follow ups on the request over eighteen months.
After the insured was put on terms, and having received no response from the insured, the insurer denied the claim.
In defending the action subsequently instituted, the insurer denied an entitlement to coverage because of the insured’s breach of its “Duties After Loss” provision. Those obligations are similar to those found in South African policies providing for the insured’s claim co-operation obligations.
The insurer pointed specifically to the insured’s failure to comply with its duty to cooperate with the insurer in its investigation of the claim and, as often as the insurer reasonably required, to provide it with requested records and documents.
The insured bore the burden of proving that it substantially complied with the terms and conditions of the insurance policy.
The court referred with approval with preceding appellate authority:
““Generally, in the absence of a reasonable excuse, when an insured fails to comply with the insurance policy provisions requiring an examination under oath and the production of documents, the breach generally results in the forfeiture of coverage, thereby relieving the insurer of its liability to pay, and provides the insurer an absolute defence to an action on the policy.”
On the evidence, the court found that there was no dispute that the insured had failed to comply with its duties after the fire and that its systematic and unexcused non-compliance with the insurer’s document request was substantial and material:
“The generally recognized rule is that an insurer is entitled to require of the insured sufficient records to substantiate the validity of the loss.”
The court was satisfied that the failure to comply with the duties was prejudicial to the insurer with the non-compliance being substantial and material.
The same result would follow under South African law where an insured is in breach of its claims cooperation obligations and the policy provides for sanction by way of forfeiture of the claim for breach.