But Supreme Court con­tro­ver­sial rul­ing may still lead to higher pre­mi­ums

Classic Car Weekly (UK) - - This Week - David Mil­loy

Fears that a re­cent Supreme Court judge­ment will al­low fraud­u­lent in­sur­ance claims to be made with im­punity have been dis­pelled – but in­dus­try ex­perts, in­clud­ing a se­nior ex­ec­u­tive with the As­so­ci­a­tion of Bri­tish In­sur­ers (ABI), warn of the risk of higher pre­mi­ums.

The judge­ment over­turned pre­vi­ous law by al­low­ing a false state­ment made to an in­surer re­gard­ing an on­go­ing claim to be treated as ir­rel­e­vant – on the ba­sis that it didn’t af­fect the va­lid­ity of the claim. As a re­sult, the in­surer was not per­mit­ted to re­ject the claim on the ba­sis of that false state­ment.

How­ever, it has since been con­firmed that the judge­ment ap­plies only where a false state­ment that has no rel­e­vance to the va­lid­ity of the claim is made to an in­surer in sup­port of a claim.

It does not – as ini­tially feared by some – af­fect a per­son’s obli­ga­tion to dis­close all ma­te­rial facts to an in­surer when mak­ing a pro­posal for in­sur­ance. Like­wise, it doesn’t af­fect an in­surer’s right to treat an in­sur­ance pol­icy as be­ing void from the start if the in­surer sub­se­quently dis­cov­ers that ma­te­rial facts have not been dis­closed to them at the pro­posal stage.

The judge­ment does not give an in­sured per­son the right to com­mit fraud by, for ex­am­ple, ly­ing in or­der to turn an in­valid in­sur­ance claim into a valid one or in­vent­ing losses that he or she has not ac­tu­ally sus­tained. An in­surer faced with a fraud­u­lent claim re­mains en­ti­tled to re­ject the claim. And any­one com­mit­ting fraud can ex­pect to face crim­i­nal charges.

Ex­perts do fear the judge­ment will re­sult in higher pre­mi­ums, as re­ported in our 3 Au­gust is­sue.

James Dal­ton, di­rec­tor of gen­eral in­sur­ance pol­icy at the ABI, warned: ‘This de­ci­sion risks push­ing up the cost of in­sur­ance and pro­long­ing the pay-out process for the vast ma­jor­ity of peo­ple who are hon­est cus­tomers.’

His com­ments about in­creased pre­mi­ums were echoed by Kevin Pratt, a con­sumer af­fairs ex­pert with mon­ey­su­per­mar­, who said: ‘The one worry is that, if in­sur­ers are pay­ing more claims as a re­sult of this rul­ing, then they will in­crease pre­mi­ums.’ ‘This de­ci­sion risks push­ing up the cost of in­sur­ance for hon­est cus­tomers’ JAMES DAL­TON, ABI

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