Misrepresentation, Non-Disclosure and Breach ... - Law Commission

10.40 The issue here is slightly different from the case in which the consumer honestly
believed what they said to be true. In the Newsholme situation, the consumer
usually accepts that what was written on the form is incorrect; the point is that
they did not realise that it was on the form at all. However, we think the same
approach should apply. If the consumer acted only negligently, or even without
negligence, the insurer’s remedies should be limited appropriately. Thus the
proposer’s signature should no longer be treated as conclusive evidence that the
consumer knew or adopted the statements on the form filled out by the
intermediary.
10.41 However, the policyholder’s signature should provide strong evidence that they
made or adopted the representations on the form. Further, in considering whether
the consumer has been negligent, we would expect the court or ombudsman to
take heed of any warnings on the form. Suppose, for example, the consumer had
signed a declaration stating that they understood the need to check the form
carefully and that they had done so, but it later emerged that they had signed the
form without reading it. This would suggest negligence. In O’Connor v Kirby the
Court of Appeal held that the insured was negligent in failing to check the form. 10
The insured applied for car insurance through an independent intermediary, who
made a mistake filling in the form. The intermediary then handed him the form
and asked him to check through it. The insured did this rapidly and failed to
notice the mistake. The court found that the insured had been negligent in failing
to check the form and had caused the loss.
10.42 However, there may be contrary evidence. Suppose that the insurer’s
representative had told the consumer that the form contained precisely the
(correct) information the proposer had given and that the proposer did not need
to read it. The intermediary may even have presented the form to the proposer in
such a way that they did not see the written warning. In such a case we do not
think the signature should be taken to be conclusive evidence of negligence. We
all regularly sign documents that we have not read carefully; but most of us think
that in our private lives this is excusable when the other party knows “what we
meant” or “what the true position is”. When coupled with a general impression
that the intermediary represents the insurer, the failure to check may be
excusable.
10.43 The policyholder may also claim that the answers were incorrect because the
intermediary had given them misleading advice as to how to answer. In this case
the proposer knows what is written on the form, and claims he was misled into
making that statement. The signed declaration does not address the issue at
stake. Nor would a signature help the court or ombudsman decide a case where
the policyholder argued that they genuinely thought their answer was correct.
10.44 We provisionally propose that a consumer insured’s signature on a
proposal form that has been completed incorrectly by a third person should
not be regarded as conclusive evidence that the insured knew of or
adopted what was written on the form.
10
[1972] 1 QB 90.
258