Insurance

Background

Apparently this is a known hazard and the insurance company stipulated specific procedures to be followed, namely that after the drying cycle the towels had to be separated and either folded or spread. These towels were a particular hazard due to the oils used in the spa for massage and other treatments.

In this particular case the towels were a part-load at the end of the evening shift and two workers unloaded and threw the towels into a collecting bin for them to be folded by the next shift. In fact the next shift was in the morning and during the early hours of the next day the towels smouldered and ignited. The fire alarm was in the process of being upgraded and so an alarm was not raised until a member of staff arrived to open up, to find the laundry ablaze. The cause was identified because of undamaged CCTV recording.

Outcome

The insurance company refused to pay out because the agreed procedures had not been followed (although they had at all other times). No settlement was achieved at the mediation but one was brokered by the mediator within a month of the mediation date, reflecting the risks to both parties if the matter went to trial.