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If an insurance policy provider wrongly refuses to consider a claim for a substantial time can it be argued it has given up its right to reinstate the losses and has to pay the insured instead? This is in relation policies which offer reinstatement or the payment of monetary value of the insured item.

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  • I think this is asking for specific legal advice, which is off topic here. It might be edited to be a general question on what the law is, but that would be a bit tricky.
    – David Siegel
    Jan 7, 2021 at 20:01
  • Understood and edited. Thanks.
    – James Carpenter
    Jan 7, 2021 at 20:11
  • Thanks. I have retracted my close vote.
    – David Siegel
    Jan 7, 2021 at 20:13

2 Answers 2

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A party does not lose all of their rights if their actions are legally in error. If the policy states that they have two options, they don't automatically lose their right to choose between the actions because they were wrong about something else (e.g. "did the triggering action take place", or something else). However, this "considerable delay" could be relevant, in that one is entitled to reasonable expectations of timeliness, and when a party appears to have breached a contract, you may have to do something (hire someone else). If you can show that because of the delay you have suffered harm and that the harm is lessened if you get a refund, then that could be the equitable outcome that the courts select. For instance, if you got a replacement on your own, another replacement is not useful to you, instead you need your money back. If there is a reason, related to how you were harmed, for you to get solution A rather than B, that could be sufficient. But if you just want to punish the other party, that's not a legally good-enough reason to override their right to choose between A and B (the UK is not as punes-happy as the US, so it is harder to establish that the company should be punished).

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I have found the answer to this. Law commission states in Issues Paper 6 that "insurers may face liability in damages for any loss of profit or other consequential loss caused to the policyholder by failing to reinstate within a reasonable time. The breach will be dealt with under normal contractual principles, and will not be subject to the type of arguments put forward in Sprung."

Therefore, the insurer becomes liable for the cost of reinstating the item.

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