In a warning to all that the fine print of insurance policies is well worth reading, a furniture company that suffered losses in excess of £700,000 in an arson attack on its warehouse will go uncompensated – after falling behind on payments to the firm that monitored its burglar alarm system.
The High Court had nothing but sympathy for the company’s director, whose life had been ‘shattered’ by the fire, and took ‘no pleasure’ in ruling that insurers were entitled to avoid liability for the fire that destroyed stock worth almost £150,000 and cost the company £560,000 in lost revenue.
The commercial combined insurance policy had obliged the company to ensure that the warehouse’s burglar alarm was monitored by an external firm. However, the company was encountering financial difficulties at the time and had failed to pay the firm’s charges for more than six months before the blaze.
The alarm was in fact still monitored when the fire broke out but the Court found that the company had been 'reckless' as to the risk that the service might be cut off at any time. Although the company may have ‘hoped and prayed’ that the firm would stay its hand, it had ‘rather buried its head in the metaphorical sand as regards this issue’.
The company had taken matters ‘far too close to the wire’ in failing to pay the firm’s outstanding charges and had instead ‘recklessly preferred to attempt to string matters out’. In those circumstances, the Court found that the company was in breach of a condition precedent in the insurance policy.