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

Case study: no need to volunteer information about threats
The complainant’s daughter had split up with her partner, who made various
threats against the family. The complainant then decided to take out contents
insurance (after five years without it). She was not asked if she had received
threats, and she did not mention them. The household was later burgled. The
insurer suspected that the ex-partner had been involved and attempted to
avoid the policy on the grounds that it should have been told about the threats.
The Ombudsman applied the rules set out above, and decided that as no
question had been asked, the insurer could not require the matter to be
disclosed. The claim should be paid. (Case 164)
3.37 Insurers were more likely to argue that the policyholder should have volunteered
information at renewal. The FOS generally expects an insurer to ask clear
questions at renewal as well. An article in Ombudsman News points out that
asking simply whether anything has changed is unlikely to produce reliable
results unless the policyholder is provided with copies of the original information:
Customers cannot be expected to remember all the details of
information they provided perhaps several years earlier. So if firms
ask them general questions such as ‘has anything changed in the
information we asked for in your proposal form?’ when they are
renewing a policy, the responses are unlikely to be reliable...
If a firm wants policyholders to check and re-confirm all the
information they provided originally, then it is good practice for the
firm to send them a copy of that information, or to ask all the
questions afresh. A firm that does not follow good practice may not
be able to use a customer’s failure to provide information as a
reason to decline a claim. 23
3.38 We found several examples where ombudsmen found that insurers had not
asked sufficiently clear questions on renewal.
23 Ombudsman News (December 2002), Issue 23.
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