Alarm maintenance obligations: Can a policyholder commit a breach by being reckless?”

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Summary: A recent decision of the High Court (Milton Furniture Limited v. Brit Insurance Limited) held that recklessness as to fulfilment of an alarm maintenance obligation constituted breach of a condition precedent.

A recent decision of the High Court (Milton Furniture Limited v. Brit Insurance Limited) held that recklessness as to fulfilment of an alarm maintenance obligation constituted breach of a condition precedent.

The Decision


General Condition (GC) 7 provided, in part, that:

“The whole of the protections including any Burglar Alarm … shall not be withdrawn or varied…”. 

Under a separate “sweeping up” clause, compliance with GC7 was a condition precedent to the Insurer’s liability.

The Claimant knew that the monitoring charge for the Burglar Alarm was payable to a security company, but failed to pay it for many months.

Mr Justice Jay concluded that by the time of the fire, the Claimant was reckless as to the risk that the monitoring service would be cut off.

The Court therefore concluded that the Claimant had breached GC7 and the Insurer was not liable.

Comment


Prior decisions have required the insurer to prove the policyholder had actual knowledge of the relevant defect before any breach of a maintenance obligation could be established.  This decision represents a hardening of the stance toward policyholders by confirming an extension of the circumstances in which they will be found to be in breach to include those where they have acted recklessly.

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