Supreme Court ruling on insurance

[oldguy57]

I heard today that the Supreme Court have ruled that fraudulent statements or evidence provided in support of an otherwise genuine claim will not now allow Insurers to decline a claim. Seems to throw out of the window the principle of utmost good faith one of the foundations of insurance contracts. Retribution perhaps for the very dodgy (bordering on fraudulent) means sometimes used by Insurers nowadays when dealing with claims. I no longer have any sympathy for them.

 

[grober]

It is OK to tell a "collateral" lie on an insurance claim, the Supreme Court has ruled, in a judgement that could affect millions of household policies. A collateral lie is one which is untrue, but does not affect the overall validity of the claim.
By that I take it this judgement means less wriggle room for insurance companies to avoid a payout on some technicality which can only be a good thing. Its not an open door for fraudulent claims or declarations.


Collateral lies OK in insurance claims, rules Supreme Court - BBC News

 

[def90cars]

I notice the women jailed for causing a crash whilst driving using a phone was not only charged with perverting the course of justice by deleting her phone records but also for driving uninsured as she failed to declared commuting.... so not all bad news.

 

[markjay]

The issue I see with this ruling is that it means that effectively insurers cannot invalidate a policy?

I.e., if an insured person provides totally fraudulent information... and then the car gets stolen... then as long as he did not lie about where the car is kept overnight, the insurers can't claim that the policy is invalid?

This is odd... the argument behind 'collateral lies' was always that it prevented the insurers from properly assessing the risk and calculating the correct premium for the policy, therefore a lower premium was paid, and the policy is invalid?

So an 18 years old can claim to be 25 years old and cute his premium by hundreds of Pounds, but and as long as the claim is not affected by his age, the policy is still valid?

 

[whitenemesis]

Que an increase in premiums .....

 

[rifiki]

Another excuse to increase Premiums.

 

[grober]

I see it as a good thing for the customer. Premiums may increase but in the event of a genuine claim after an accident that cheaper policy is worthless if the insurance companies constantly wriggle out of paying on a technicality?

 

[st13phil]

The issue I see with this ruling is that it means that effectively insurers cannot invalidate a policy?

That's not what the SC ruling was about. It was specifically about lying in support of an otherwise valid claim. So in the particular case that was ruled upon, the claim was actually valid, but the insured chose to include a lie as further justification for their claim. Without that lie the insurer would have been bound to pay out, but used the lie to (unlawfully in the view of the SC) void the claim.

 

[brucemillar]

Thank you Phil. That is how I understood it. The SC has already ruled on insurers using the "lie" factor to avoid paying out. As I recall that involved an insurer declining a claim on the grounds that the insured had stated their car was not modified when they took out the policy. The insurer then stated that the car was modified so the insurance was invalidated and the claim was void. The insurer stated that the insured had lied on their insurance application.

The SC ruled that the car was indeed modified from it's standard build but the insurer could not decline the claim as the insured could not be proved to have lied. They could not reasonably have been expected to know that the car was modified prior to them buying it. IIRC the car had been fitted with aftermarket wheels and an aftermarket stereo, by a previous owner. The ruling was very involved but the premise was that it would be unreasonable to expect every motorist to recognise that their car had been modified if that modification was not glaringly obvious to the general public. It also looked at whether this should be considered in the event that it had no bearing the actual claim. The insurers win the point that a lie was a fraud. I think that this is a further iteration of that argument.

I had a massive interest in this at the time as RSA attempted to decline a non-fault claim on my car stating that it had non-standard wheels (modified). It did. But I had declared them to the insurer who had accepted this with no additional fee. Also with no additional note made on my insurance (lesson learned) get it in writing.

I argued that my wheels had no bearing on a 45 ton Articulated truck rear ending a queue of stationary traffic on the M1 pushing the car behind me underneath me and setting it on fire.

I used this case in my argument and RSA paid out without further argument.

So it is possible to lie without realising that you are doing so. I would be very wary of attempting to do so knowing that you are doing so. Insurance companies like social media and enjoy reading up on their clients exploits and tales of daring-do.

 

[markjay]

I think there's some confusion here.... are we talking about:

(a) A case where the insured person did not declare a modification because he did not know the car was modified? If so then it is not a 'lie'. Can't see why a Supreme Court ruling would be required for that - This is just a matter of common sense that the insurer cannot invalidate a policy based on the insured not declaring something that he did not know about.

(b) The insured person knew about the modification but did not declare the modification? In this case I think it would be unfair to the insurers if they can't invalidate a policy that was taken out based on an outright lie - and this is what I was referring to in my post above.

(c) The insured person claimed he did not know about the modification, but the insurer claims he did? I would expect the burden of proof to be on the insurer i.e. that it is unreasonable to assume that the owner was not aware of such a blatantly obvious modification (if applicable).

(d) The insured person knew about the modification, and declared it, but it did not register with the insurer? Well this is down to keeping records of conversations with insurers.

These are four very different cases.

 

[grober]

issue 46 - non-disclosure in insurance cases

 

[oldguy57]

Interesting that the decision overturns the Ombudsman's view about deliberately lying to Insurers being fraud and indeed alters the whole aspect of utmost good faith. I don't know the details but I would suspect there was more to the case than what was reported. Insurers may have found many unsatisfactory aspects to the claim but hinged their case on just the one and came unstuck - I don't know if this applied in this case but I saw it happen many many times when working in the industry.

 

[Deleted member 37751]

As Bruce alludes to earlier, this ruling is more about stopping insurance companies from slithering their way out of genuine claims than anything else - Bruce's point about his wheels being a perfect example of an insurer will do absolutely everything in their powers to find a way out of paying what's due. It's taken a lot of time to drag these companies (kicking and screaming I may add) into some sort of responsibility.

As a business owner myself, I always try and deal with companies in the same way I like to be treated and I've got to say that it really is a funny industry; I had a massive insurance building contract in 2008 refurbing those houses that had been flooded that summer and dealing with the loss adjusters and insurance companies pretty much kick started my cynicism of life - policy holders had lost pretty much everything and the loss adjusters were not only playing hardball with the work, they blankly refused every opening gambit with quotations, in fact iirc there were major changes after the 2007 floods because of the despicable behaviour of the insurance industry as a whole.