I’ve read several articles in the press recently about the fact that people sometimes lie to their insurance company. One of these articles (in The Independent) calculated that one-in-five of us do this. It’s nothing new: we often come across this (it’s called non-disclosure) when people approach us over difficulties with their insurance claim.
The sort of lies people tell are often driven by the desire to save money, but of course if you need to make a claim then it could do the complete opposite. Common ‘deceptions’ include not telling your insurer that you’ve suffered losses in the past, or that your house has serious structural faults, or stating you have certain types of locks or a burglar alarm when you don’t.
But it’s not all black and white. There’s some very good information on the website of the Financial Ombudsman which explains where the law stands on this – and in particular explains four key terms: whether the misinformation was deliberate, reckless, innocent or inadvertent. This excerpt from the site sums it up well: Everything turns on the individual circumstances. Customers will find it more difficult to prove that they acted inadvertently if they answered several questions badly. To get one or two questions wrong may be regarded as inadvertent; to get several wrong starts to look like recklessness.
If a case goes to the Financial Ombudsman, they will consider two things before taking it on: firstly, whether the insurer asked a clear question about the matter under dispute; and secondly whether the answer to that question influenced the insurer’s decision to enter into the contract with the customer. The Ombudsman will only look into the case if the answer to both of those is ‘yes’.