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

C.45 At one level stress is a normal part of life - and many people will at some stage
mention the stresses they are under to their doctor. They will not necessarily
think of this as a medical condition from which they are “suffering”, especially if it
is a reaction to external events. For example, in Case 53 the insurer attempted to
avoid the policy on the grounds that Mr C said he did not suffer from stress.
However, his medical notes revealed that two years earlier an Occupational
Health Nursing Officer reported that he had “raised stress levels” as his wife was
depressed following her father’s death and he was coping with young children.
The doctor had also entered one line saying Mr C was “stressed with early
morning waking”. In Case 125 a woman had taken time off work for stress, but
saw this as related to her matrimonial problems rather than her health.
C.46 Backache is a particularly prevalent condition. One estimate suggests that it
affects over a third of adults. 6 Several people in the survey failed to mention that
they had previously suffered from backache if it was no longer a problem for
them. In Case 55, for example, the policyholder failed to mention that she had
experienced back pain following childbirth more than 5 years previously. In Case
7 the policyholder asked her intermediary, and was told only to mention a
problem that had occurred in the last 2 years.
Questions relating to building and contents insurance
C.47 In our survey, 27 cases related to contents insurance and 5 to building insurance,
forming around a sixth of the total sample. In this context, most non-disclosure
was about previous claims or losses (16 cases, 50%); or previous convictions (6
cases, 19%). Other issues included subsidence (3 cases); locks and alarms; or
the value of the contents.
C.48 Household insurance proposal forms commonly ask questions along the following
lines:
Have any accidents, losses or claims arisen, whether insured or not?
Have you or anyone living with you made a claim or had an incident
which may have resulted in a claim or suffered loss, damage or
liability during the last 5 years, whether insured or not?
C.49 The survey revealed three issues with questions of this sort. First, people may
not remember minor claims made more that three years previously; they may be
unaware that other people living with them have made claims; or they may not
understand what is meant by “loss or damage” that does not result in a claim.
C.50 If interpreted literally, “loss or damage” could cover any occasion on which a
household item is lost or damaged, but few people would interpret the question in
this way. In Case 11, for example, Mrs T’s young son had spilled candle wax on
the carpet. A few months later she had redecorated the room and replaced the
carpet. The insurer attempted to argue that her failure to mention this incident
when she renewed her insurance entitled them to avoid the policy, though the
ombudsman ruled that the phrase “suffered loss” could not be intended to include
all damage to a home caused by young children.
6 See http://www.backcare.org.uk/backhealth/
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