Heritage Insurance Loses Fire Claim

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Heritage Insurance Company has been ordered by the High Court to pay nearly US$1 million to a company whose property was gutted by fire three years ago after its rejection of the claim by disowning the client failed.

Heritage was ordered by the High Court to honour a US$963 650 insurance claim from Quirad Private Limited, a company whose industrial property in Harare was destroyed by fire in August 2013.

Heritage was dragged to court after it refused to pay the claim, arguing that at the time the fire burnt down the complex, which is situated at the intersection of Lyton Road and Paisley Road in the Workington industrial area, no insurance contract existed between it and Quirad.

The insurance firm argued that Quirad only paid its premium a day after the fire had gutted the premises.

“The parties had expressly agreed that no cover would be in place unless the premiums had been paid. The plaintiff had, as at the date of the loss, not paid any premium and only got to do so on the 14th of August 2013. Only a contract to insure as opposed to an insurance contract was in existence between the parties as at the date of the loss,” Heritage argued.

The premises were gutted by the fire on August 12, 2013.

However, through its director, Natubhai Tarbhubhai Patel, Quirad argued that it had insurance policies with Heritage providing annual cover for more than 10 companies, whose premiums were payable on a quarterly basis.

Patel pointed out that even when the premiums were overdue, there had been no termination of the contract or lapse of the policies as evidenced by the fact that Heritage always accepted payment whenever it came without altering the terms of the original annual contract.

Even after the fire, Heritage had gone on to accept two other premiums from Quirad, even though it would later claim that it did not have any valid insurance contract with the company.

After a full trial in which both sides argued their cases, Justice Clement Phiri ruled that indeed a valid insurance contract existed between the parties, resulting in him ordering the insurer to honour its side of the bargain.

“Furthermore the witness (Charles Huni, a manager at Heritage) was cross examined whether the payments made by the plaintiff and receipts so issued, in the payments of the premiums, indicated any break in the contractual relationship between the parties and furthermore whether there was any mention that the contract had lapsed? The answer was in the negative.

“In the circumstances, I hold that the defendant has no valid defence to the plaintiff’s claim and accordingly enter judgment in favour of the plaintiff and that the defendant be and is hereby ordered to pay US$963 650, 00, interest on the aforesaid sum at the prescribed rate of interest from 16 of August, 2013 to the date of payment and costs of suit.

Quirad’s claim was broken down as follows: Damage of the structure of the building, requiring a replacement structure, together with the cost of demolition, and the removal of rabble, debris and steel in the total sum of US$587 650; damage to electrical installations, including two heavy duty distribution boards and high amperage cables in the sum of US$85 000; damage to the 10 tonne crane and installation in a sum in excess of the insured amount being US$213 000 and loss of rentals receivable by the plaintiff from Poly Waste (Private) Limited for a period of 12 months totalling US$78 000.

Although the parties had promised to submit closing statements at the close of the trial, Heritage opted not to do so, angering Phiri.

“I am alarmed that the defendants chose not to file its written closing submission after having made an undertaking to file the same.

“I take note of the fact that this court earlier on condoned the defendant’s late filing of its submissions after having indicated it would timeously do so.

“This was in respect of its application for absolution from the instance. Such conduct, on the part of defendants, deserves censure by this court in the strongest possible terms.” – allafrica.com

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