Lawyers acting for families affected by Europe’s worst peacetime fire in 2005 say the oil company has yet pay damages

Four years on from the Buncefield oil depot explosion, reckoned to be the largest peacetime fire in Europe, lawyers representing 275 locals say that only “between 15 and 20″ of their claims have been fully settled by the oil company responsible.

Residents near the Hertfordshire site, which went up in flames after an explosion that measured 2.4 on the Richter scale, have received compensation payouts from insurers, but are still pursuing claims against the oil company Total UK for uninsured loss, personal injury, as well as for loss of earnings and falling house prices.

No one was killed in the blaze but 43 people were injured and 2,000 forced to abandon homes. Some families claim to be still recovering from the explosion that took place at 6.01am on Sunday, 11 December 2005, and was said to have been heard more than 100 miles away.

David Mitchell, a TV producer who lives with his family about 400 metres from the site , says images are “still vivid” in his memory. “The whole house was shaking and bits of ceiling were coming down. There was a huge roar that went on for ages. It was terrifying.”

Mitchell’s first response was to check on his two children (five and eight at the time) who were still in their beds, unharmed but “covered with rubble”. He then ran outside: “It seemed like there were flames 100 metres wide and half a mile high.”

In March 2009 the High Court ruled that Total would have to foot a bill of possibly more than £750m in damages for claims arising from the Buncefield fire. Chevron, the US oil giant that co-owns the site, was cleared of liability. Last month, Total pleaded guilty to two health and safety charges, as well as to polluting water.

Cash first spoke to Heidi Brazier and her husband, Carl, in December 2006 on the first anniversary of the fire, when they and their seven children, were spending a second Christmas in a hotel. Their insurer has so far paid out more than £100,000 on their property, and they are claiming a further £25,000 in uninsured loss from Total, including replacement windows, kitchen worktops and a bathroom suite.

“How can a company even contemplate running the site again when they haven’t compensated those affected by the blast they caused?” asks Heidi. “It is such an insult to us.”

Des Collins, of Hertfordshire law firm Collins Solicitors, is acting for many of the families. “Total has been and continues to be impossible to deal with as far as these claims are concerned,” he says. “We’re four years on and we have been acting for 275 people and 15 to 20 claims have settled. The trouble is they offer ludicrously low amounts of money.”

A spokesman for Total insists that 92% of the claims “are either settled or were insured, and we are working hard to resolve the remaining claims … Any suggestion that Total is in any way hindering the settlement of claims is misleading and factually incorrect.”

Collins says the Braziers’ total claim is far larger than the £25,000 uninsured loss and would include a substantial claim for loss of earnings. Carl lost his job as a senior manager at National Grid, because of a heart condition caused by blood pressure following the explosion.

Many families have been unable to sell their homes. Collins has 15 clients, including the Braziers and Mitchells, who are claiming for diminution of value in their properties as well as for pollution of the environment. Collins says Land Registry searches indicate a “13% price differential” between house prices in East Hemel, 2,00mowhere the site is, and West Hemel.

Mitchell, who has so far received about £85,000 under his insurance policy with Norwich Union Direct, says the area still looks like a war zone.

“We are not trying to make a profit but we would like some sort of compensation for the way that they have turned our lives upside down,” he says.

Despite last month’s ruling, he says, “No one has said sorry to us for allowing this to happen.”

The publication of a parliamentary bill could do away with a law that punishes insurance claimants for honest mistakes

An archaic law that means thousands of insurance claims each year are unfairly rejected by insurers could be overturned following the imminent publication of a parliamentary bill.

Claims made on motor, travel, household and health policies are routinely turned down by some insurance companies under an anomaly in the law, which dates back to 1906 and puts a “duty of disclosure” on the policyholder.

This means policyholders are expected to disclose not only things they have been asked for, such as known medical conditions, but also things that they haven’t which could later turn out to be significant. So, someone who is diagnosed with throat cancer, for example, could see their health insurance claim rejected if they had failed to mention a past visit to the doctor for a sore throat when they applied for the policy – even when the doctor prescribed nothing more than a few days’ rest, and the question was not asked by the insurer.

Claims are also turned down when householders accidentally get information wrong. A common example is when applying for household insurance, where the question “Are the locks British ’safety-standard’, a five-lever mortice lock conforming to BS3621, or a cylinder rim deadlock?” is commonly asked. Not surprisingly – especially since a householder would often need to take the lock out of the door to find out – it is often answered wrongly. Yet, if a householder claims on their policy, even for something unrelated to locks, such as a fire, they could find their claim rejected.

Consumer groups, health charities and many insurance companies have long called for a change to the law, saying that it is unclear and unfair.

“At the moment, the obligation is on you, the consumer, to disclose all the facts that might have an effect – decisive or not – on the mind of a prudent underwriter in assessing the risk,” says Peter Tyldesley, a lecturer at the University of Manchester and insurance law specialist. “This is setting consumers up to fail.”

After years of consultation on the issue, on 15 December the Law Commission will present a draft bill to parliament that should spell the beginning of the end to these often disastrous discrepancies in the law.

The Observer understands that the bill will propose the law is changed to abolish the duty of disclosure – volunteering information without being asked – to providing only the information asked for by insurers. It will also propose changes to the way insurance companies deal with policyholders when they get something wrong. So, for example, if a policyholder makes an innocent mistake, they will have their claim paid in full and if they are “careless”, rather than reckless, they should get a proportionate payout. If, for example, they have only paid half the premium which would have been charged had the underwriter known the true facts, they may receive a payout of only half the amount of their loss.

“The issues of non-disclosure and misrepresentation have been running for many years,” says Tamara Goriely of the Law Commission. “We think the law needs to be changed so that it is clear, accessible and easy to understand.”

At the moment, around 1,000 insurance cases a year involving non-disclosure end up with the Financial Ombudsman Service, which often then rules in a policyholder’s favour. The vast majority of these claims are for large amounts of money, says the Law Commission, often involving people going through a particularly vulnerable time such as dealing with a cancer or MS diagnosis.

“We’ve always had a broader view of disclosure than the courts,” says an FOS spokesman. “If the insurer hasn’t been specific enough in its questions, for example, we might rule in the consumer’s favour.”

Marketing consultant Inga McVicar had to turn to the FOS in 2007 when she was diagnosed with ovarian cancer but found herself unable to claim on her critical illness insurance policy. Her insurance company turned down her claim over a discrepancy in her answers on the initial form, which was due to an error by her financial adviser.

As soon as she realised the error, says McVicar, 33, she told her insurer but it treated the policy as if it had never existed. “What shocked me more was the horrific way my insurance company dealt with me over it,” she says. “They branded me a liar, failed to return my calls and, to add insult to injury, in a letter to me referred to my diagnosis as breast cancer not ovarian cancer.”

By February 2008, McVicar had to return to work as she is self-employed, despite the fact she was undergoing chemotherapy. “To add to this, the anomaly in my policy the insurer was referring to didn’t remotely relate to my diagnosis and it turns out even if I had answered that one question correctly I would have been covered, albeit with increased premiums,” she says.

Macmillan Cancer Support provided Inga with a grant to help with her basic needs while she took her case to the Financial Ombudsman Service. The ombudsman ruled in her favour, agreeing that it was a genuine mistake. She got a payout of £46,000 and is now in remission from the cancer.

Many insurers do not apply the letter of the law, taking a more reasonable approach to claims. However, a minority do apply it rigorously.

A spokesman for the Association of British Insurers, said: “We don’t believe there is any need for intervention as far as non-disclosure is concerned. Where there are areas of concern, we believe these have been addressed. We have introduced a code of practice for critical illness insurance and the number of complaints has reduced significantly.”

However, progress has not been made in other areas, says Goriely. “In household, motor and travel, particularly where the claim relates to a medical condition, there is no evidence that [disputes over non-disclosure] have dropped off.”

“We think it’s ridiculous that consumer insurance is based on an archaic law from 1906,” says Phil Jones, public affairs officer at Which?

“The Law Commission report is an excellent opportunity to address this issue so we urge all political parties to support the bill.”

■ Have you had a claim refused for non-disclosure, and did you resolve the issue? Would you support a change in the law? Email us at cash@observer.co.uk or write to us at Cash, The Observer, Kings Place, 90 York Way, London, N1 9GU.