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Case Study: RECLAIM Consulting (Product Loss/Damage)


The Challenge

An assured suffered a loss (paid by insurers at US$958,000) in September 2010 when a vehicle operated by a third party collided with a power line outside the assured’s factory, causing a power outage of seven seconds. The product – a temperature sensitive consignment – was therefore exposed to ambient air in production and ruled a total loss. Our challenge was to recover the loss paid by insurers. We held lengthy calls with lawyers appointed for the opponent and their experts (without any legal experts of our own being appointed) to seek settlement. While we were able to demonstrate fault on the part of the vehicle, the claim centred on proving the loss and the foreseeability of damages. The claim was subject to North Carolina Law, which is not favourable to claimants. After several attempted declinations, we received an offer of US$250,000.

The Solution

We conducted extensive research which revealed a strong possibility that there was as a fault with a fan on the loader/lyophilizer containing the product in question – if this fan had worked, the loss could have been significantly reduced/prevented. This was a concern given the North Carolina jurisdiction. If this information, which was discoverable, came to light in a court case a judge could rule that the assured was at fault only at part, putting our entire claim at risk. We therefore knew, following reports to insurers that settlement must be reached out of court. The foreseeability of damages was also a factor – the assured did consider this but it was not deemed cost effective.

The Result

We were able to increase the offer to US$350,000 and onto US$500,000 with a final “take it or litigate” offer of US$650,000.

About RECLAIM Consulting Services
RECLAIM Consulting Services (RECLAIM) is a leading provider of claims management and recovery services. For further information, please visit our page on uk.marsh.com.

This case study is for illustration purposes only and should not be relied upon as governing your specific facts and circumstances. Actual claims are governed by your specific policy terms, conditions, limits and exclusions and are subject to individual claims review by applicable insurer representatives.