The importance of terms

A surveyor was appointed by an insurance company to assess damage suffered by a yacht following a heavy storm.

The insurance company did not confirm cover and the yacht owner issued legal proceedings against not only the insurance company but also the surveyor. The claim alleged not only a wrongful failure to pay the claim but also that the defendants had engaged in unfair and deceptive acts.

The claim was for the alleged cost of the damage to the yacht of US$ 62,000. Under the heading of deceptive acts the claimant demanded US$ 100,000 for mental anguish and US$ 30,000 for attorney fees.

ITIC arranged for a local lawyer to defend the surveyor’s interests. The insurance company denied that they had any responsibility for the claimant’s decision to sue the surveyor and invited the surveyor to contribute to a settlement.

However, the surveyor had agreed to do the work on the basis of their terms and conditions. These contained an indemnity for claims from third parties not caused by the surveyor’s negligence. In the circumstances the insurance company settled the claim without the surveyor providing a contribution.

ITIC reimbursed the surveyor’s legal fees.

This claim shows how important it is for terms and conditions to be incorporated into all business dealings. ITIC’s terms and conditions for surveyors and consultants, and guidelines for incorporating these, can be found at: https://www.itic-insure.com/knowledge/standard-trading-conditions/standard-trading-conditions-indemnity-wording/