In December 2015, a trust arranged insurance on its boat with an insurer.
In January 2016, a trustee of the trust was driving the boat when swells developed. He said he went over a wave and the boat landed awkwardly, there was a bang, the engine temperature rose rapidly and so he shut down the motors. It was later discovered that the crank shaft had snapped.
Unfortunately, through an error, a claim for the damage was made to another insurer, which arranged for a company to assess the damage. The company viewed photos of the damage and said the damage was not a one-off break in the crank shaft, rather the metal had fatigued over time. On that basis, a metallurgist was appointed to determine whether there had been metal fatigue. The metallurgist stated that the crankshaft “fractured due to torsional fatigue failure”, and this fatiguing must have started well before the trust purchased the boat. The metallurgist confirmed that this would have occurred over period of time.
In April 2016, the trust made a claim to the insurer for the damage. The insurer had a copy of the information provided by the company and the metallurgist. Based on these opinions, the insurer believed the damage was not “sudden” and, therefore, fell outside the scope of cover provided by the policy.
The trust did not believe that the insurer could rely on the expert opinions, because they did not provide a definitive opinion on the cause of the damage, instead using the term “likely”. The trust believed that the damage was sudden, caused by the bad landing coming off a wave. The trust also raised concerns about delays and the conduct of the company.
The case manager’s assessment
Because the complaint was only referred to the insurer in April 2016, the insurer was not responsible for any delays or conduct prior to this time. In addition, the company was appointed by the other insurer. This meant the insurer was not responsible for the company’s conduct.
Therefore, the IFSO Scheme was not able to assist the trust with this aspect of the complaint. When making a claim under an insurance
policy, the initial onus is on the insured to establish that he/she has suffered a loss, which is covered by the policy. This is known as a prima facie claim.
The legal test for this is on “the balance of probabilities”. In this case, it meant the trust, not the insurer, must show that, on the balance of probabilities, the damage was more likely than not “sudden”. However, the reports, particularly the metallurgist’s opinion, was that the metal in the crank shaft had fatigued over a period of time, and resulted in its eventual snapping. As such, the damage was not “sudden”.
The trust said that the crank shaft has been lost. Therefore, it was not able to get its own expert opinion. As such, the case manager had to rely on the expert opinions provided by the insurer. Accordingly, the insurer was entitled to decline the claim as outside the scope of cover provided by the policy.
