A high court judge has ruled that insurance firm Zurich won’t have to pay out a £4.3 million claim from Hartlepool-based recycling company Niramax, relating to damage caused by a fire to Eggersman machinery in 2015.
However, Zurich was ordered to pay £534,632 for losses related to older equipment damaged in the fire and return £32,782 that Niramax paid to extend its policy to cover the new sorting machine.
The decision was handed down 9 March, after the case was heard in December 2019
The decision was handed down by judge High Court Judge Sara Cockerill on Monday, 9 March.
Judge Cockerill ruled that Zurich would have denied an extension to Niramax’s policy to include the machinery in its existing policy had it been aware of all the required details.
A spokesperson for Zurich said to letsrecycle.com: “We acknowledge the court’s judgement on this matter. Zurich pursued this case in the courts to establish a clear point of principle around non-disclosure and a failure to comply with risk improvement actions.”
Niramax has been approached by letsrecycle.com for comment.
Fire
The fire took place in December 2015 (credit: Env Agency Yorks&NE)
As outlined in Judge Cockerill’s ruling, the fire occurred in December 2015 (see letsrecycle.com story) after starting in the engine compartment of a grab which was in a building known as the ‘Rec Shed’.
Staff thought they had put it out, but it then spread to a building which contained a “brand new multi-million pound sorting machine”, which was destroyed.
Policy
The court document details that Niramax had a policy with Zurich since 2006, which was renewed at the end of every calendar year.
In mid 2015, Niramax looked to extend this to cover the arrival of the Eggersmann plant.
Despite the request initially being turned down, the decision document said, this was eventually granted by Zurich until the end of the policy year, saying a representative of the company felt “effectively duty-bound to Niramax to at least cover the Eggersmann plant until the policy renewal”.
The fire occurred before renewal in December 2015. On renewal Zurich declined to cover Niramax’s fixed plant, the decision document said.
Claim
Soon after the blaze, Niramax claimed on the insurance policy it had with Zurich. The judge said the insurance firm “had only recently and reluctantly added the Eggersmann plant to a policy of all risks contractors’ mobile plant insurance”.
“The claim succeeds in part only – that which relates to the non-Eggersmann equipment and the extra premium charged”
Zurich wanted to avoid the policy after this claim, the decision document said, contending that Niramax had failed to disclose five material circumstances for the renewal earlier in the year.
This included a previous fire, fine and conviction of a director. Niramax insisted in its written agreement for the trial that Zurich was not entitled to void its policy – it insisted the underwriters were not duped into extending the policy.
Ruling
Handing down her decision, Judge Cockerill said: “I conclude that Mr Penny [Zurich representative] would not have added the Eggersmann plant to the Policy if the extra information had been disclosed.
“Niramax did delay in complying with the risk requirements, and did demonstrate a somewhat lackadaisical approach to responding to what were plainly serious concerns on the party of their property underwriters,” the decision added.
“I conclude that the claim succeeds in part only – that which relates to the non-Eggersmann equipment and that the extra premium charged for the September extension falls to be returned”.
Useful links
The full decision document can be read here.
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Source: letsrecycle.com Waste Managment
