‘COSTS WILL GO UP FOR ALL…’
Top insurer on how latest ruling affects premiums.
The Association of British Insurers is claiming that classic car owners are likely to pay higher insurance premiums in the future. The news follows a recent Supreme Court ruling that partially fraudulent claims needn’t be invalidated. The Supreme Court of the United Kingdom has ruled that lying on an insurance policy or claim needn’t invalidate the policy provided the lie does not directly affect the claim. Judges voted four-to-one in favour of relaxing fraud protocols, to accept claims that might include what have are known as ‘collateral lies’.
The ABI claims that it will affect all motor insurers, including those specialising in classic cars.
The original case involved a shipping company, which lied on a claim and was judged by the court to have used a ‘fraudulent device’. This was upheld by the Court of Appeal, but overturned by the Supreme Court, which judged that the lie was immaterial to the claim itself. This has set a new precedent that could impact upon all insurance policies including those of classic cars.
Lord Clarke, one of the judges involved in the final ruling, says: ‘The critical point is that, in the case of a collateral lie… the insured is trying to obtain no more than the law regards as his entitlement, and the lie is irrelevant to the existence of that entitlement. Such a lie is immaterial to the claim.’
The Association of British Insurers claims that it could mean premium increases for each and every policy.
Chief media relations officer Malcolm Tarling says: ‘ We opposed this ruling because we can’t see that it benefits honest customers or the insurers – what it does is create the impression that lying is acceptable, and that you might as well give it a shot because you might get away with it. But if this increases the likelihood of fraud, it will not only mean insurers take longer to verify and settle claims but it will increase the cost of the average insurance policy to account for the cost of fraudulent claims.’
Classic car insurers have given mixed reactions. While some suggest that the specialist nature of classic policies means this is less likely to affect enthusiasts than those who drive modern cars, others agree with the ABI’s view that premiums will have to rise to cover the cost of fraudulent claims. The overwhelming feeling among insurers is that enthusiasts are less likely to make false statements, simply out of concern for their beloved cars.
‘ What it does is create the impression that lying is acceptable, and that you might as well give it a shot’
Insurers are warning that premiums could go up because lies told on an insurance policy or claim needn’t invalidate it.