When you’re insuring your car, you’re looking for the best deal and that usually means the cheapest deal.
In that environment, it is easy to think that a little ‘white lie’ about your vehicle or your circumstances will not hurt you if it saves you a few pounds.
That is a risky and inadvisable approach, as a recent decision from Greenock Sheriff Court illustrates.
The claimant in that case had insured his Audi with Zenith Insurance.
When the vehicle was stolen, he claimed on his car insurance for the value of the vehicle.
The claim was refused.
Zenith said they were treating his policy as void.
They refunded the premiums he had paid (amounting to about £1,440) but refused to pay him the value of his car (about £20,000).
He sued Zenith for payment of the value of the car.
He lost.
Insurance contracts are contracts of the utmost good faith
Basically, this means that you, as the insured, have a duty to disclose all material or “important” facts that might have a bearing on the insurers’ decision about how much to charge for insurance – or even whether to offer you insurance at all.
In other words, if you are in doubt about whether something is a material fact, it is safest to disclose it.
In the case mentioned above, the Sheriff held that the claimant had failed in his duty to act with the utmost good faith and Zenith were entitled and correct to void the contract.
The failure in question was a misrepresentation of the exact model of car he owned.
The Sheriff decided he had told Zenith that the car he had was an Audi A4 2 litre model.
In fact, the car was an Audi A4 DTM FSI Quattro. It was a limited edition model. It was a much higher specification and value of car than the type of Audi A4 he had told Zenith he was insuring.
Other problems with non-disclosure or incomplete disclosure
Failure to disclose the exact model of car you are insuring is just one of the ways you can come to grief.
If you need your vehicle for business use, then you need to make sure your insurance contract does not only cover domestic or leisure use.
We have also seen insurance companies taking issue with a failure to disclose a part-time job a person has in addition to his or her main full-time job where they have been involved in an accident at a time when they were arguably travelling to or from work in relation to that part-time job.
Insurance companies now generally record all telephone conversations with customers and you can expect that a written transcript of your discussion with them at the time you took out the insurance will be produced against you if they consider you have withheld important information in taking out the insurance.
How you can best protect yourself
When you take out motor insurance, the insurer or insurance broker will send you a “Statement of Facts”, which will set out their understanding of the information you have provided.
It is important to read this carefully.
If you are concerned that anything has been misunderstood or omitted, it is best to raise this with the insurers at the time.
Otherwise, if problems come to light later on, you can be sure it will be you, not the insurers, who loses out.
As the above court case demonstrates, that loss might be many thousands of pounds.
Don’t take any chances
If you are concerned that an important issue might have been misunderstood or omitted by your insurers in assessing your motor insurance premium, the best idea is to point it out to them as soon as possible.
If you need to claim on your insurance for any reason, rest assured that most insurers will do their best to find any loophole that will minimise or eliminate their duty to indemnify you.
How we can help you
If you have any queries about issues raised by this blog post, Peter Brash would be glad to hear from you either by email or on 01343 544077.
Remember that all initial enquiries are free of charge and without obligation.
