A fire that devastated an historic pub and hotel in Rye, East Sussex, has led to a legal dispute between the broker and underwriter over who should pay more than £2m in insurance.
The George in Rye, a 16th century coaching house, caught fire in the early hours of 20 July 2019. The property was gutted and, following a three-year renovation project, reopened in May this year.
Although owners Katie and Alex Clarke had used a broker to deal with all of their insurance issues, when they claimed, the underwriter refused to pay out on business interruption insurance and other polices, saying that the polices had been taken out in the wrong name.
According to court documents, the problem was that the insured under the policy was “George on High Ltd/trading as The George in Rye.”
The problem arose because the freehold of the property is owned by a company called George on High Ltd and the restaurant and hotel business is owned by George on Rye Ltd. Both companies are owned by a company ultimately owned by the Clarkes.
Insurer New India Assurance Company argued the policy title did not cover George on Rye Ltd, leaving the hotel and restaurant business uninsured.
Broker Alan Boswell Insurance Brokers disagreed. Even so, following legal action from the Clarkes, it agreed that it would be liable for any insurance the insurer was not liable for. This led to a trial in which High Court judge Simon Tinker had to decide who was responsible for each insurance policy: the broker or the insurer.
“I must… put myself in the shoes of a reasonable person and decide, knowing all that background, what the words ‘George on High Ltd t/a The George in Rye’ mean,” he said in a ruling handed down yesterday.
He said a reasonable person would look at the wording and see that it was “plainly wrong, and insufficient to identify what was meant”.
“Having all the other knowledge which would reasonably have been available to the parties in the situation in which they were in November 2018 at the time of entering into the contract, I would conclude that the meaning of the ‘insured’ is ‘George on High Ltd and the business operated by GOR t/a The George in Rye’”.
This means that the hotel and restaurant business was insured, so the insurer should pay out.
He ordered that the insurer should pay £892,000 in business interruption insurance, £24,000 in stock insurance and £575,000 in contents insurance.
Separately, he ruled that the broker was liable for £776,000 for the uninsured loss of rental income.
George on High Ltd and another v Alan Boswell Insurance Brokers Ltd and another
KBD, London Circuit Commercial Court (Simon Tinkler sitting as a Deputy High Court Judge) 27 July 2023
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