A property owner approached us with a problem. One of his properties had been let to an ostensibly respectable family who converted the house into a cannabis farm. This came to light as a result of a small fire at the property. When the fire brigade attended, the occupants disappeared. The fire caused a small amount of damage, but much more damage had been caused in the conversion of the house into an illegal drugs den.
When the owner notified his brokers they told him that it was their belief that the Lloyds underwriters would not deal with the damage, other than the small amount caused by the fire, since underwriters had experience of similar incidents and had repudiated liability on the grounds that the damage had not been caused maliciously, but was the product of an illegal act.
We challenged underwriters and argued that given that they had previously they had declined to deal with similar claims, they had a duty to their insured to state clearly that this type of incident would be excluded. Given that they had not excluded this in their policy wording we held that they were liable and following lengthy discussions they agreed to deal with this claim in its entirety.
Insurers settled fully, enabling the property owners to restore his property to a lettable state.