After the Fire

A Major Loss Case Studyfor the Insurance Institute of Plymouth

Paul Thomas ACII, FCILA, FUEDI-ELAE

Major Loss Director, QuestGates

Format of Case Study

The Parties

Case Scenario

The Management of the Incident / Claim

Issues Considered in the Adjustment of the Claim

Who are the Parties

Freeholder

Who are the Parties

Freeholder as Owner/OccupierPrivate house

Industrial unit

Office

Freeholder as LandlordRents the property to a Tenant

Multiple occupancy tenants

Who are the Parties

Multiple occupancy building

Private residence flats - Leaseholders

The Parties

Freeholder owns the land

Leaseholders purchase the leasehold for a set sum for a set period (99 year or 999 year lease)

Leaseholders pay a ground rent, usually nominal, to the freeholder

Leaseholders (or freeholder) form a Management Company comprising all the leaseholders who elect from their number the Officers of the Management Company

The Parties

Freeholders /

Management

Companies

Managing Agents

Leaseholders

Tenants

Letting

Agents

The Parties

The grounds, exterior and common elements of the building need to be maintained and leaseholders obligations enforced as necessary

The freeholder can organise and manage this or the freeholder can grant a “Right to Manage” to the Management Company (RTM)

Where the Management Company has a RTM the Officers of the Management Co can organise this or can appoint a Managing Agent to represent them and undertake these tasks

Legal Relationship between Parties

Freeholder / Management Company / RTM

Management agreement

Individual Lease Contracts

LeaseholdersManaging

Agents

No direct contractual agreement

The Insured

Bristol Road Management Company

The Insured Premises

A four storey block of 28 one and two bedroom flats

The Management Company has contracted management of the block to Managing Agents

Leaseholders in residence

Leaseholders who let their flat to tenants

The Parties

Freeholder

Bristol Road Management Co. (RTM)

Managing Agents

Leaseholders (as occupiers)

Leaseholders (as Landlords)

Letting agent

Tenants

The Insured Event

Fire originating in a top floor tenanted flat

Scope of damage

Issues

Management of the Claim

Scope of Damage

Scope of Damage

Scope of Damage

Scope of Damage

                 

                 

LEASEHOLDER LEASEHOLDER TENANT LEASEHOLDER

                 

                 

                 

                 

                 

                 

                 

TENANT TENANT STAIRS LIFT LEASEHOLDER

                 

                 

                 

Issues

Cause of fire

Whole block without power / lifts out of action / roof partially open

Managing agent moved everyone into hotels

Management of the Claim

Major Loss Director

Major Loss Surveyor

Regional Adjuster

Supported by:QuestGates Concierge Team

Forensics

QuestGates vetted and approved suppliers (contractor, project surveyors, damage mitigation contractor)

Management of the Claim

Power to block restored / lifts recommissioned / common areas sanitised

All lower floor residents moved back in within 5 days

Seven top floor flats not habitable

“Top hat” the damaged roof. Reinstate ceilings / decor / electrics of top floor common corridor

Decontaminate three lightly smoked flats

Management of the Claim

Decontaminate two heavily smoked flats. Repaired fire damaged entrance doors

Flats habitable by week four post fire

Water / fire damaged flat had ceilings taken down and reinstated, electrics made good, redecorated etc. Flat habitable by week eight post fire

Gutted flat stripped out

Schedule of works for fire gutted flat and main roof tendered

Last flat habitable by week twenty two post fire

Issues in the Adjustment of the Claim

Managing Agents / Letting agent fees

Managing Agents decision to put all residents into local hotel accommodation

Asbestos

Effective decontamination of smoked flats only if contents cleaned as well

Pigeons

Issues in the Adjustment of the Claim

Tenant where fire originated left hospital with no forwarding address / contact details

Informal tenancy

Unlicensed alteration to fire gutted flat

Q & A

How were the Issues Resolved

Managing Agents / lettings agents fees

Alternative accommodation costs

Cleaning of flats (contents)

Pigeons

Clearance of tenants fire damaged possessions without approval

Loss of rent where no formal tenancy existed

Unlicensed alterations to flat reinstatement

Proximate Cause

“Proximate cause means the active efficient cause that sets in motion a train of events which brings about a result without the intervention of any force started and working actively from a new and independent source” [Pawsey v Scottish Union and National (1908)]

Proximate Cause – the “dominant” cause Separate and intervening cause

Policy Definition of Insured Rent

Rent Receivable

The money paid or payable to the Insured for accommodation and services provided as landlord (including service charges unless excluded by Endorsement) at the Premises shown on the schedule