WILLEMSTAD/PHILIPSBURG--Pasanggrahan Hotel is entitled to US $5.5 million from insurer Nagico for the damage caused by Hurricane Irma in September 2017. A declaration of entitlement for this was recently issued by the Court of First Instance. The ruling was published this week.
Nagico has insured the hotel for many years against hurricane damage, among other things. Pasanggrahan consists of four buildings: a monumental building including the reception; a building with retail space, laundry and storage space; a three-storey building with hotel rooms; and a five-storey building with hotel rooms. The contacts between Nagico and the hotel about the annual renewal of the insurance policies went through the insurance intermediary Oriental.
The hotel had stated that it pays its premiums annually. It had requested that only the old main building, which includes the hotel’s kitchen, be insured for fire only. After Hurricane Irma it became clear that the hotel had fallen victim to Nagico’s sloppiness and the Babylonian confusion of language between Nagico and its agent Oriental. “A sloppiness that Nagico ‘uses’ to state that the three-story building, consisting of 18 hotel rooms, is only insured against fire,” the judge said.
The old main building is the original monument from 1904 with the lobby, bar, kitchen and restaurant. Wrongly, the storage building and the three storey-building with hotel rooms are therefore no longer insured against hurricane damage.
The hotel states that if the error was made by Oriental, it should be attributed to Nagico, because Oriental acted on behalf of Nagico. The insurer rejects the claims. The court points out that Nagico must still provide coverage, which prompted Nagico to invoke an arbitration clause.
The judge stated that it follows from the documents, in particular the e-mail correspondence between the hotel, Oriental and Nagico, as well as the forms completed by the hotel, that few precise terms are used to designate the various buildings.
“It seems that everyone assumes to know the local situation very well so that there can actually be no misunderstanding. This is also in line with the small scale of St. Maarten and the familiarity of everyone with the hotel that partly has a monument status and is located in a prominent place on the Boardwalk. Only: Because of that sloppiness, problems arise when damage actually occurs.”
Looking purely at the description in the policy, it is clear to anyone who knows the local situation that the description means that only a single building is insured against hurricane damage and the rest of the complex is not, the judge concluded.
“This is actually not possible, because that means that the rest of the buildings are insured for a much lower amount than the three-storey building. That is not easy to understand, because why would you, as a hotel owner, only insure one building of the entire complex against hurricane damage?”
In the opinion of the court, there was a misunderstanding in the communication in the chain Hotel-Oriental-Nagico in 2013, as a result of which, with the carelessness by Nagico, a completely different policy description was created on November 5, 2013, compared to the policies before that.
In the contracts after 2013, this remained in the policies because no one thought about it anymore and because Nagico, as the hotel rightly argues, sometimes merely sent a renewal certificate so that no breakdown was visible of the sum for which the specific buildings were insured.
In short, the court is of the opinion that three buildings are part of the coverage against hurricane damage. For the main building with offices and reception area, only coverage against fire applies, because hurricane damage is covered by the policy of the contractor. This means that the other three buildings together had hurricane coverage of $5.5 million dollars on September 6, 2017, when Hurricane Irma hit.
