{"id":161,"date":"2020-03-11T00:00:00","date_gmt":"2020-03-11T00:00:00","guid":{"rendered":"https:\/\/fenchurchlaw.hostingsystems.co.uk\/uk\/blog\/2020\/03\/11\/reinstatement-re-stated\/"},"modified":"2024-08-21T16:26:06","modified_gmt":"2024-08-21T15:26:06","slug":"reinstatement-re-stated","status":"publish","type":"post","link":"https:\/\/fenchurchlaw.com\/en-uk\/reinstatement-re-stated\/","title":{"rendered":"Reinstatement re-stated"},"content":{"rendered":"<p>In its recent judgment in\u00a0<strong><em>Endurance Corporate Capital v Sartex<\/em><\/strong>\u00a0(05\/03\/20), the Court of Appeal confirmed that, absent any contractual provision to the contrary, the appropriate basis of indemnity in a property policy is the reinstatement basis &#8211; ie, the cost of repairing\/replacing the damaged\/destroyed building. The only exception is is where, at the time of the loss, the policyholder had been planning to sell the building, rather than continuing to use it.<\/p>\n<p>The Court of Appeal rejected the Insurer\u2019s case that, in order to be entitled to the cost of reinstatement (rather than merely the decrease in market value, where that was lower), the policyholder needed either to have already carried out the reinstatement itself or at least &#8211; as per\u00a0<em>Great Lakes v Western Trading<\/em>\u00a0(CoA, 11\/10\/16) &#8211; to have held a\u00a0<em>\u201cfixed and settled intention\u201d<\/em>\u00a0to do so.\u00a0In a blow to property insurers, the Court of Appeal ruled that this requirement only applied in the very rare situation where the flood, fire, etc had\u00a0<em>increased<\/em>\u00a0the value of the building &#8211; as had occurred in the\u00a0<em>Great Lakes<\/em>\u00a0case (see\u00a0<a href=\"https:\/\/www.fenchurchlaw.co.uk\/ordinary-measure-indemnity-great-lakes-reinsurance-uk-se-v-western-trading-limited\/\">https:\/\/www.fenchurchlaw.co.uk\/ordinary-measure-indemnity-great-lakes-reinsurance-uk-se-v-western-trading-limited\/<\/a>).<\/p>\n<p>In a further blow to property insurers, the Court of Appeal held that they cannot apply a blanket percentage discount (in practice, often as much as 30-35%) to the cost of reinstatement, to represent the alleged betterment where an old building was replaced using modern materials. A deduction for betterment will be permitted only where insurers can prove and quantify the lower running costs of the new building or, in the case of new plant &amp; machinery, its greater efficiency.<\/p>\n<p><a href=\"https:\/\/www.bailii.org\/ew\/cases\/EWCA\/Civ\/2020\/308.html\">https:\/\/www.bailii.org\/ew\/cases\/EWCA\/Civ\/2020\/308.html<\/a><\/p>\n<p><a href=\"mailto: jonathan.corman@fenchurchlaw.co.uk\">Jonathan Corman<\/a> is a partner at Fenchurch Law<\/p>\n","protected":false},"excerpt":{"rendered":"<p>In its recent judgment in\u00a0Endurance Corporate Capital v Sartex\u00a0(05\/03\/20), the Court of Appeal confirmed that, absent any contractual provision to [&hellip;]<\/p>\n","protected":false},"author":68,"featured_media":154,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[3],"tags":[106,122,316,317],"class_list":["post-161","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-property","tag-court-of-appeal","tag-great-lakes-v-western-trading","tag-reinstatement"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.2 - 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