Insurance Proposal forms - getting it right

01 July 2014

Last year’s decision by the Court of Appeal in the case of Genesis Housing Association Limited v Liberty Syndicate Management Limited emphasises why accuracy is all important when completing proposal forms. 

The roots of the case go back to 2007, when a member of the Genesis Group acquired the leasehold to a large number of flats and engaged Time and Tide (Bedford) Ltd (TTB) to renovate the properties. The contract terms placed a requirement on TTB to secure building guarantee cover for the benefit of Genesis and the future owners of the properties. To comply with this requirement, TTB approached the specialist insurance providers MD Insurance Services Ltd. for a quotation, which was also to include an indemnity to Genesis in the event of TTB’s insolvency during the build period. 

The proposal form was, however, completed by an MD employee and then signed by one of the owners/directors of TTB ‘for and on behalf of Genesis (as agent) and TTB’. Unfortunately, however, the name of the builder was shown on the proposal as Time and Tide Construction Ltd (TTC). Although the two companies were connected, TTC was an established company with a reasonable credit rating, whist TTB was a recently created special purpose vehicle, with no established credit rating. In any event, virtually all of the construction work was subcontracted to a company called 3Sixty Construction. 

TTB became insolvent during the construction period and whilst other contractors were engaged to complete the work, Genesis inevitably suffered a financial loss and sought indemnity under the policy.

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For further information, please contact Bill Walker, Risk Management & Sales Executive, Public Sector Risk Practice on +44 (0)20 7528 3272