After the Fire A Major Loss Case Study for 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/Occupier  Private house  Industrial unit  Office Freeholder as Landlord  Rents 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 Leaseholders Managing 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

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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