Independent Insurance has been forced to pay out almost £70,000 to three injured miners after a landmark judgment in the Scottish Court of Sessions last week.
The miners' lawyer Lawrence Lumsden, of Thompsons Scotland, warned that Independent could face more claims from miners who received injuries and contracted industrial diseases at the Monktonhall pit, for which Independent provided insurance.
And Independent was blasted by National Union of Mineworkers' (Scotland) president Nicky Wilson for “trying to wriggle out of their insurance obligations”.
An Independent spokesman said the company would not appeal the decision.
Joseph Aitken, Alexander Bennett and Robert Ward had claimed compensation for injuries they received while working at the pit in Midlothian. All three had had their compensation claims against the mine approved in a previous court case.
Independent argued that, because Monktonhall went into liquidation in April 1997, an excess clause meant that it should not be forced to pay out the first £25,000 for any work-related injury claim.
That meant Aitken, who had claimed £22,500, and Bennett, who had claimed £20,000, would receive nothing. Ward, who had claimed £150,000, would have had £25,000 withheld from his compensation.
However, after hearing the case, Lord Macfadyen ruled that Independent was in breach of its obligations under the 1969 Employers' Liability Compulsory Insurance Act.
Lumsden said the decision had repercussions for all UK insurers.
“This judgment means that any insurer in the UK seeking to rely on an excess clause to deny injured workers damages properly due to them after an employer has gone out of business, will now find it very difficult to do so,” he said.
Lumsden said the miners' only other recourse would have been to seek payment of the £25,000 in question from the pit's liquidators.
“This would clearly have been out of the question since the liquidator had no funds,” he said.
“In the end, these men have had to go through two court actions; one to get a decree against Monktonhall and the other to force the insurance company to pay out when it tried to renege on its obligations.”
Wilson criticised Independent's behaviour during the case.
“We know that when companies go out of business it can sometimes be difficult for injured men to trace insurance interests for claims, but this is the first experience we've had of an insurer trying to wriggle out of its insurance obligations,” he said.
Independent's spokesman said the case was still being investigated by its claims manager.
“We wanted clarification of the legal position, which has now happened,” he said.
“We're now satisfied with the decision and won't be appealing.”