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Business Insurance Policy broker cant find policy wording to support my claim.


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Posted (edited)

In 2016 my business was subject to a fraud regarding a Rolex watch which we had taken in as part exchange from a local and well known customer. We took his steel Rolex and he paid a few thousand £s extra and bought a pre owned gold one from us.  Having bought his watch, part of the deal was we would not sell it until he returned from over wintering  in Australia after a few months. Upon his return he was planning to either part exchange the pre owned gold one back and buy a brand new version of it,  or he might like to simply  buy his original one back.  The watch therefore sat in my safe for nearly a year. At which point we attempted to contact the customer only to find his obituary. He was ill before he travelled so we suspect he knew he might not return.

 

It was a few weeks before Christmas so we put his (which was now ours) watch in the window (as it was) to sell and sold it within a few days. Had it not sold before Christmas we  would have sent it to Rolex for service and refurbishment, and subsequently offer it for a higher price in the spring (Rolex would also have identified it as fake). Two years later the customer that bought the watch returned it quite upset after he had sent it to a national watch buyer to sell, but was told it was a high end counterfeit (ie not your $20 Chinese throwaway, but one purposely manufactured to deceive).

 

After some checking ourselves, we refunded the customer and spoke with our insurers.

 

Our business insurance provided all risks cover with a few exclusions (terrorism etc) and was a very well known policy that many/most UK retail jewellers take up. Indeed we had held the policy for many years.  Fraud is an insured risk.

 

It is my view that a customer selling us a fake watch is a fraud. The broker enquired with underwriters and they have said it is not covered. I am not satisfied and have asked the broker to send me the wording of the policy so I can read the exclusions. I am told they have searched their archive but cannot find the policy so cannot send it to me. They have asked me if I have my copy? I haven't found my policy document either and fear I threw it away upon renewal. But wonder, if I do keep looking, whether it would be a good tactic to let them have my copy. We have been renovating the house for a year and the attic is absolutely chock a block with stuff, a thorough search through the old books would take a week or more.  I have suggested if they cannot find the wording sold with my policy they should settle the claim. Clearly they cannot reject the claim without the wording? It sounds odd to me that they even need to retrieve the policy to find the wording. 

 

I am quite certain a claim for fraud is an insured risk. I guess somebody has to judge whether the transaction was fraudulent first though. I am quite happy to issue a summons if the insurers reject my claim by trying to suggest the risk was not covered (unless it obviously isn't), which is why we need the wording.

 

Comments and a strategy would be very useful to understand whether or how to proceed. The claim is for £3500.

Edited by Its WAR

Its WAR

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I suspect that if the wording of your policy does cover "fraud", it will probably mean the criminal offence of fraud.  So far as I'm aware, that would require your original customer - whom I think you say you knew well - to have known it was a fake and to be acting with dishonest intent when he sold it to you in 2016.

 

So can you satisfy your insurer (or a court) that your long-standing customer was acting dishonestly when you bought it from him?

 

3 hours ago, Its WAR said:

 

It is my view that a customer selling us a fake watch is a fraud.

 

I don't think a court or your insurer will necessarily agree with you.

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Insurance companies are required to keep copies of policy wordings they have issued for at least 6 years beyond when the last related policy was in force. It is a requirement of FCA to have robust administration systems in place to ensure they can underwrite the risks they have accepted. If they don't keep copies of wordings, they might not be able to satisfy FCA that they have sufficient resources to administer and settle any claims they received.

 

Agree with @Manxman in exile
that you will have to prove fraud which is difficult as the deceased may have thought the watch was genuine.

 

Also surely your business should have been more diligent in checking the watch. I would find it difficult to believe Insurers would cover mistakes made by jewellers in accepting fake watches. 

 

There was opportunity to have taken the watch to a Rolex specialist before the original trade was done and given the value of these, this would be a reasonable requirement of Insurers to expect a business to have done.

 

Don't think I would take the Insurers to Court without a lot more thought about this. If you cannot find policy wording and the Insurers cannot provide it, may be the option is to ask for your premiums back (providing no other claims made) as the Insurers cannot prove they have been providing Insurance.

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Good Manxman. I agree. I cannot show my customer acted with intent as he is now dead. He may well not have known his watch was fake. Although I argue the one fact we know is that  nevertheless the watch was fake. 

 

I agree UB. Surely the documents must be available via the broker and in any case they would know who the underwriters were for that year. If they cannot find the policy wording document (even if I can, which I haven't yet), I think that should strengthen my claim. I accept I should have been more diligent, but as we were not expecting to sell the watch, it went straight into my safe rather than to Rolex for verification. I suppose really, because my customer spent £5000 on the one he part exchanged for, my guard was down. I accept the point entirely the insurer would want to cover my mistake, but my mistake is not what I am claiming is covered, I am claiming a fraud.........and that is covered. Of course lots of other things are covered even if the jeweller makes a mistake, eg  by turning away from the counter and leaving an  item more easily taken by snatch and run. Or la mistake leaving a display counter unlocked and an item mysteriously disappearing. So I think I have a valid argument, just not yet a very strong one. I would have regarded myself as a watch specialist but just made a mistake that would not have happened had we not had the circumstances of this transaction. The watch would normally have gone immediately for service, refurb and verification. Surely the insurer can prove cover simply by looking at the invoice, sadly it is the policy wording I need to show the strength of cover, more particularly the exclusions.

 

And Woody, yes, I don't know the insurance company or underwriters. Probably Lloyds of London. I expect the broker knows and will be able to turn up the paperwork from them, even if they have lost theirs.......which I find hard to believe.

 

Its WAR

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  • 5 weeks later...

Broker has found the policy but not the wording, which I find very odd. He has submitted it to the underwriters but thinks it will be considered as a trading risk rather than a fraud.I suppose the question to consider is whether a fraud occurs if the 'fraudster' had no idea he was committing it because he thought the watch was genuine? Or whether regardless, was it still a fraudulent transaction?

Its WAR

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Believe for fraud, there has to be intent.   

 

If there are no reaonable grounds for believing the person trading the watch knew it was fake, then I would think Police would not be willing to investigate.  And the person concerned is now deceased, so not sure how it coulld be investigated. 

 

The Insurers would be expecting you to make a report to Police for them to consider it as a possible fraud.  And the Police are going to want you to explain why you believe it was fraud.  

 

I agree with the brokers that it will be considered a trading risk.  The watch should have been checked by a Rolex authorised dealer, before the trade was done.

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