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.


How Banks are Cashing in on Wills image

How Banks are Cashing in on Wills

Recent headlines have reported how banks are now cashing in on Wills.

During the 1990s and early 2000s, banks offered customers low cost Wills (or sometimes even free Wills) but the small print allowed the bank to charge extortionate rates to act as Executors. It is reported that banks are expecting billions of pounds of revenue from their Will writing services and administering estates and in some cases their fees have been over £12,000 to administer an estate as they look to charge a fixed fee PLUS a percentage of the deceased’s wealth.

If you or a loved one has made a Will through a bank we would urge you to check who you have appointed as Executors and check any small print which you may have signed. If you are unsure then please speak with one of our lawyers in the Wills and Probate team who can look at your existing Will with you. It may be appropriate to make a new Will which revokes any previous Will you have made which could save your family thousands of pounds when your estate needs to be administered.

In the majority of cases, when someone has passed away we can provide the family with a quote of how much the legal fees will be so that there are no nasty surprises once the administration is complete.

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Jamie Dobbs ACILEx

Over the last forty years I have cause to deal with many law firms both in a personal and professional capacity, including some ‘top’ London Companies. In all of those dealings I have never found anyone as proactive and so willing to offer help and advice as Jamie Dobbs. During the last two years Jamie guided my parents through the completion of Lasting Powers of Attorney. Helped myself with the use of the LPA and recently dealing with Probate and Estate Administration following their death.

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