Telling lies does not necessarily invalidate Insur

25th July 2016
Telling lies does not necessarily invalidate Insur image

Telling lies does not necessarily invalidate Ins.

Introduction

It has long been established in English law that an insured cannot successfully claim from an insurer where the insured’s claim has been fabricated or dishonestly exaggerated.  This is known as the Fraudulent Claims Rule (“the FCR”).  Obviously the FCR was designed to deter fraud.  However on the 20th July 2017 the Supreme Court, the highest court in the United Kingdom, considered a more recent extension of the FCR to “collateral lies” which are lies told by the insured to embellish the claim but which are irrelevant because the claim is justified whether the statement is true or not.

An example of a “collateral lie” being the insured producing a false receipt for a stolen computer worth £1,000 when the computer has been stolen and is actually worth £1,000.

The Supreme Court held, by 4 judges to 1, in Versloot Dredging BV and Another v HDI Gerling Industrie Versicherung AG and Others that the FCR does not apply to “collateral lies” which are immaterial to the insured’s right to recover.

The Versloot Case

The insured’s boat had been damaged beyond repair by a peril of the seas, namely very inclement weather.  The insured presented a claim to its insurers for a sum in excess of €3 million claiming that the crew had heard the bilge alarm but could not investigate because the vessel was rolling in heavy waters.  This was a lie but it was irrelevant to the claim since it was found that a peril of the seas had caused the loss.  Initially the courts held that the lie was a “fraudulent device” which did mean that the insurers did not have to pay out under the policy.

The Supreme Court however held that the FCR did not apply to “collateral lies” as the lie was immaterial and irrelevant to the honest claim.  The loss was caused by the bad weather and as such the lie was irrelevant.

Conclusions

Daven Naghen head of our Dispute Resolution Team has commented on the case as follows:-

“This ruling does distinguish between on the one hand fraudulent claims which are fabricated or dishonestly exaggerated, and valid claims supported by irrelevant lies or embellished evidence.  In the latter these false statements stand to gain nothing more for the insured beyond what it is legally due.  I do think that this is a victory for common sense.  However I would continue to encourage persons to be entirely frank and honest with insurers in such circumstances, since in particular if the lie is deemed material to the claim then there is a very strong chance that the claim will be rightly rejected by the insurer.  In particular inflating the value of an otherwise genuine claim still remains fraud and is likely to lead to a rejection of the claim.”

If you require advice on an insurance claim then please contact Daven Naghen on 01775 722261 or email daven.naghen@maplessolicitors.com or arrange an appointment or visit our offices at 23 New Road, Spalding, Lincolnshire, PE11 1DH.


Maples supporting Macmillan Coffee Morning image

Maples supporting Macmillan Coffee Morning

On 29th September 2017 Maples Solicitors LLP will be hosting a coffee morning as part of Macmillan’s “World’s Biggest Coffee Morning”.

Tea, coffee and cakes will be served from 10:00am until 1:00pm and all donations received will go to Macmillan Cancer Support to assist them with providing medical, emotional, practical and financial support to those facing cancer and their families.

At the same time, Maples will also be running a free Wills, Lasting Powers of Attorney and Probate clinic so that whilst you are in the office you may take the opportunity to discuss any of these with one of the Private Client Team with no obligation to commit. You can use the time to raise any questions you may have about making a Will, who you could appoint as Executors, whether you need a Power of Attorney or how a Power of Attorney works, for example.

Maples hope to see their existing clients join them for the coffee morning and very much look forward to meeting new people- everyone is welcome!

If you would like to discuss any matters in relation to Wills, Lasting Powers of Attorney or any Probate related matters prior to the coffee morning then please contact one of the lawyers in our private client team:-

Jane Mawer- jane.mawer@maplessolicitors.com
Jamie Dobbs- jamie.dobbs@maplessolicitors.com
Faye Blair- faye.blair@maplessolcitors.com

Or telephone the office on 01775 722261 and ask to speak with one of the team.

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