Insurance company backing out because of criminal record

[StuzaTheGreat]

Hey guys

 

a mates just had an upstairs flat flood his. Now long story short, his insurance company is saying that they won't cover him because he has a criminal record and didn't tell them. Can they actually use this as a no-pay defence or is it a case of them trying to bluff him off?

 

(He didn't tell them as didn't realise he had to)

 

 

Thanks!

[loopinlouie]

If applied for over the phone could ask for a transcript of the original call to see if question asked. Also would need to check policy to see if it mentions criminal records in terms and conditions.

[Tom87]

It seems fairly simple. If they didn't ask him about a criminal record, that's their problem. If they asked him and he declared it and they still sold him the policy, that's also their problem. If they asked him and he lied then they have every reason not to pay up. I would check the Ts & Cs though to check if it says anything in the smallprint.

 

Basically if they didn't ask him about it and it was not in any terms and conditions that he had to voluntarily declare it, then he did NOT have to tell them about it. Sounds like they're trying to squirm out of paying to be honest. Keep pressing them.

[vusys1]

if he didnt tell them it also depends on the conviction as minor ones are still acceptable, drunk etc

[majorclanger100]

Unfortunately it isn't quite as simple as if the insurance company didn't ask him about convictions then he's OK. There is a long-established legal principle in the insurance industry of disclosure of material fact (material fact is defined as any circumstance which may influence an underwriter in his/her decision). The Marine Insurance Act 1906 defines this principle.

 

Your mate's insurers would argue that they would not have insured him in the first place if they'd known about the convictions. Your mate had a legal duty to disclose this - unfortunately not knowing that he had a duty to disclose is no defence, and there is no legal requirement upon the insurer to ask the question. If non-disclosure has occurred his insurer has the right to cancel the policy from the start date.

 

Having said that if the conviction is covered under the Rehabilitation of Offenders Act then that might be a different story- there is a bit of a grey area here (although a lot of insurers ignore the ROA and won't insure anyone with convictions, no matter how old).

 

The Law Commission have recently announced a proposal that insurance contract law is outdated and needs reforming, particularly in relation to disclosure of material fact, but that is probably no consolation!

 

He needs to make a complaint to the insurer and, if that doesn't work, then go to the Financial Ombudsman Service. He may have a case against the owners of the upstairs flat, but only if he can prove negligence (for instance if there had been an ongoing leak which they'd been made aware of and done nothing about, etc)

 

Sorry that this is bad news

[Tom87]

That's interesting, majorclanger, thanks for bringing that up. Shame it is not good news for the OP though.

 

It seems quite unfair though. I think the onus should be on the insurance company to ask, and if they don't then that's their problem. Like if you are buying a used car, the onus is on the potential buyer to ask, not on the seller to disclose, and if they find a fault that they hadn't bothered to ask about then tough luck.

 

As for home insurance, it should depend what the conviction is. For example if the OP's friend has a conviction for, say, fraud, or some offence under the Theft Act that involves dishonesty, then it would be understandable if an insurance company refused to insure someone because of that. But if they had a conviction for, say, dangerous/careless driving, it can fairly easily be argued that the conviction has absolutely nothing whatsoever to do with them insuring their home.

 

The Law Commission regularly publishes interesting and sensible proposals for changes in the law that are worth seriously considering, but sadly most of the time they are completely ignored by parliament and our criminal justice system!

[majorclanger100]

Hi Tom87

 

I agree with you entirely. I work as an insurance underwriter and there are a surprising number of people in the industry who think that disclosure of material fact places an unfair burden on the consumer and a loophole for insurers to avoid paying claims.

 

There have been cases where insurers reject claims for totally unconnected non-disclosure - such as life insurance not paying out because a previous non-routine health check hasn't been disclosed at proposal stage for instance (ridiculous if the results of the health check are normal and the death is accident-related).

 

If the insurer wants certain information then it isn't too hard to put together a set of questions for the proposed client to answer - I really hope that this time the Law Commission are taken seriously and there are some reforms because this is long overdue!

 

MC

[MrShed]

MC100 on a side note - I fail to see why negligence would need to be proven as opposed to responsibility and/or at fault, with regards a claim against the flat owner.

 

Even if the flat owner had not been aware of the leak, and they resolved it quickly, they are still responsible for the financial loss to other parties due to the issue with their property.

[hightail]

I fail to see why negligence would need to be proven as opposed to responsibility and/or at fault, with regards a claim against the flat owner.

 

Is there a different level between being negligent and at fault? If there is, then presumably the claim is one of nuisance. Do the owners of an upstairs flat have to be negligent for it to be their fault the downstairs one was flooded?

[MrShed]

At the end of the day, if the flood came from their property, it is their fault.

[hightail]

I agree with you. I wondered what constitutes 'fault' for a successful claim. There are quite a few posts about downstairs flats being flooded and suggestions that there would have to be proof of negligence. I wondered if a claim in nuisance would be more appropriate and easier.

[MrShed]

I would agree - I fail to see the relevance of negligence.

 

If my car was parked in the street, the handbrake cable snapped for whatever reason and it hit another car, it would be my responsibility (obviously my insurers).

 

I fail to see the difference.

 

You do not have to be negligent or (morally) "at fault" to be responsible.

[majorclanger100]

Hi MrShed & Hightail

 

I think you've posted on the wrong thread but I'll reply here anyway if the OP doesn't mind?

 

It is a common misconception that a property owner accidentally causing damage to another property (water leak, etc) must somehow be financially responsible. MrShed says that if the leak came from their property then it's their fault. Not at law it isn't.

 

I have seen hundreds of these claims in the 20 years I've been an underwriter and not one has been successfully recovered against the property owner - insurers won't even try (and I've seen some big ones in my time!). You have to remember than an insurance policy is a legal contract and operates within the arena of UK law.

 

MrShed states that you don't need to be negligent or morally 'at fault' to be responsible. This may be the case in everyday life but this is most certainly not the case in law - and any such claim would operate within the law of property. Such a claim would only be successful if you could prove on the balance of probability that the neighbour had been negligent (the tort of negligence being specifically the failure in the property owner's duty of care to his/her neighbour) and therefore you suffered a loss as a result. A water leak from a flat which was accidental, sudden and unforeseen would fall entirely outside this definition. No liability would attach.

 

You state that a claim should be considered under nuisance. In law the tort of nuisance is defined as the continuous, unlawful and indirect interference (of the neighbour's enjoyment of his or her property, etc). Clearly an accidental water leak doesn't remotely fall within this definition either, especially as some degree of forseeability has to be proved.

 

There is a very big difference between the handbrake cable snapping in your car and it rolling into another one (in which case your motor insurers would certainly pay out) and a case of an accidental leak from a property. Motor insurance and liability to third parties is governed by the Road Traffic Act and other statutes - there is no remote comparison as these operate in a different area of law.

 

Finding someone to blame (and therefore claim against) for every unfortunate event that happens in life seems to be an all too common attitude nowadays - thanks to the US for that. Sometimes it can just be a genuine accident and thankfully UK law still recognises that.

 

Sorry for getting on my soapbox

 

Best wishes. MC

[hightail]

You state that a claim should be considered under nuisance

I was wondering, not stating so thank you for answering.

 

I've been an underwriter and not one has been successfully recovered against the property owner - insurers won't even try (and I've seen some big ones in my time)!

If true, a very close member of my family has been lying to me for years about how they make their living. I can assure you insurers do try, sometimes on surprisingly small claims.

[MrShed]

Hi MC100.

 

No we werent posting on the wrong thread, just discussing around the points.

 

I am not an expert in the field, but what you state still seems wrong on many levels to me.

 

I will lose any debate, as as I say I have no knowledge of the detail.

 

What I can tell you is that in almost identical circumstances, with no foresight or negligence, I have been involved in two similar situations where the exact opposite to what you have stated has been the case - i.e. the upstairs flat owner has been found responsible following civil suits.

[Mossycat]

Hi MC100.

 

No we werent posting on the wrong thread, just discussing around the points.

 

I am not an expert in the field, but what you state still seems wrong on many levels to me.

 

I will lose any debate, as as I say I have no knowledge of the detail.

 

What I can tell you is that in almost identical circumstances, with no foresight or negligence, I have been involved in two similar situations where the exact opposite to what you have stated has been the case - i.e. the upstairs flat owner has been found responsible following civil suits.

 

 

It sounds to me like you have received payouts either as a nuisance value (it was cheaper to pay your claim than argue) (I wasn't calling you a nuisance by the way ), or they did it as a gesture of goodwill, or you were lucky and had your claim handled by an inexperienced person. Whatever the reasons you received a payout was certainly not because of any legal obligation on the part of the insurer because as Majorclanger has so eloquently explained, there isn't one.

 

I know it may seem that it isn't right, or it defies logic, but that's the way it is.

 

Mossy

[MrShed]

Fair enough MC (and MC100 ).

[Tom87]

MC is correct. Under the tort of negligence, it is not sufficient just to say that the other guy must be liable because the flood came from his flat. Although it is quite possible that he has done something negligent, e.g. leave bath running, amongst a million other options, it cannot just be taken for granted and there is always a possibility that it was a genuine, unforeseen incident, in which case the upstairs neighbour has zero liability. As MC says, the law here thankfully still understands that genuine accidents can occur and that it is unfair to punish someone in such an eventuality.

 

Just one of many potential reasons for the flood: the upstairs neighbour's water company was negligent in fitting/fixing pipes, sink, bath etc. If this was the cause of the flood, then the liability would fall with the upstairs neighbour's water company, NOT the neighbour himself, as he could not have reasonably foreseen that there would be a failure, whereas the water company, with their expert knowledge, should have known better. I could go on all days with the different possibilities.

 

You would also have to prove that the neighbour had a duty of care and a proximate relationship with the OP to stand any chance whatsoever of proving negligence. It's far more complicated than simply saying "his flat flooded mine, so it's his fault."

 

---

 

I can assure you insurers do try, sometimes on surprisingly small claims.

 

Sorry, but I think the umpteen thousands of people who've come on here after completely unacceptable behaviour from rip-off insurers taking them for a ride and doing absolutely anything to avoid paying up, will disagree with this. Insurers do try: yes, as hard as they can, to find a petty excuse not to pay up on a genuine claim.

Edited February 13, 2010 by Tom87

[MrShed]

Tom, in hightails defence, you have taken that quote completely out of context, and responded to a comment he didnt even make.

 

He said they do try - to recover from the third party.

[hightail]

e.g. leave bath running, amongst a million other options, it cannot just be taken for granted

 

That's the obvious example and it is always a matter of thoroughly the insurer investigates. The blame can (far too) often be traced back to the plumbers/fitters or even manufacturers but it can also be something the householder should have noticed. A persistent damp patch on the floor of an upper flat ignored by the occupant, can become a sudden flood to the lower one.

 

I agree completely that the level of investigation is woeful in most cases. It's one of those things where you get exactly what you pay for and if you want the top level of service you aren't going to be led by prices on comparison websites.