‘COSTS WILL GO UP FOR ALL…’

Top in­surer on how lat­est rul­ing af­fects pre­mi­ums.

Classic Car Weekly (UK) - - Front Page - Sam Skel­ton

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.

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