The statement made by Simon to the claimant giving implied permission for the repair works on the building to commence may have put the latter in a risky position of losing the amount of money spent on the repair works after his claim was declined. The relevant tort associated with Simon’s action is negligence because it defines acts of carelessness that may lead to a policyholder suffering losses as a result of a denied claim. According to the Chartered Insurance Institute, four main elements need to be proven to demonstrate negligence. They include duty, breach, causation, and harm.
The duty of care is one of the main principles proving negligence in Simon’s case because it refers to the responsibility given to insurance companies to work expeditiously and in a way that would not cause harm to a policyholder. However, this duty of care was not observed, and it led to the claimant relying on erroneous information to commence repair works, thereby proving negligence. Simon’s actions were also negligent because he breached his duty to act reasonably.
When asked whether repair works on the building could commence, or not, his response was, “it will be fine” implying an approval for the policyholder to commence repair works under the assumption that he will be compensated. Given that this permission was granted while no formal claims approval was made, it can be reasonably assumed that Simon misled the claimant into using their resources for repairs, thereby proving a breach. Therefore, Simon disregarded his duty of care when advising the claimant, thereby affirming the view that his actions were negligent and injurious to his client.
Legal Remedy Available to the Policyholder
Acts of negligence are often proven when an insurance company fails to satisfy the duty of care implied in insurance contracts. For compensation to be assigned, it should be proven that the actions of an insurance company caused losses or damage to a policyholder through exposure. Simon can be sued in a court of law under the Hedley Byrne rule, where the Chartered Insurance Institute assumes that liability arises where.
- The policyholder and the insurance firm share a “special relationship” where it is reasonable to assume that the policyholder would act on the advice of the insurance firm.
- The insurance firm would foresee that the policyholder is likely to act on the advice and that they could suffer significant losses by doing so or likely incur damages if the information provided is inaccurate.
- The advice provided by the insurance firm is acted upon, and the policyholder suffers significant damage as a result.
In the present case involving Simon and the claimant, the conditions outlined above were met. The insurance company was unable to meet the obligation of providing a reliable response when the approval to commence repair works was sought. The main remedy associated with this type of tort is awarding damages, which is a form of financial compensation to a claimant. Indeed, damages are often awarded to compensate claimants for the financial losses they incur from a libelous action. Different classes of damages may be awarded in a court of law. They include special damages, aggravated damages, exemplary damages, nominal damages, and contemptuous damages. In the present case, the policyholder has an opportunity to seek legal redress by pursuing the awarding of exemplary damages to compensate for the losses incurred. This type of damage is likely to be given because the nature of the case is a function of civil law as opposed to criminal law.