Car insurance claim void.

[stuthesaint]

I believe that I can clarify this matter for you.

There are many issues here which may be addressed, but the most salient comes down not so much to that of insurable interest, but of the maxim of the utmost good faith.

This maxim which is applicable to all contracts of insurance effectively means that you must disclose any relevant points to the insurance company, even if you are not asked.

From the insurers point of view, they have been presented with a £10k theft claim and they will effectively do whatever they are legally entitled to do to avoid the claim, in this instance even the policy as a whole (since inception, or change of details).

Most people when taking out a policy of insurance don't fully appreciate the possible consequences of the contract to which they are entering. Everything and anything that may affect the policy of insurance must be disclosed.

Regardless of the vague reasons that the insurers have given you for avoiding the policy, I can assure you that it would have been due to the fact that the finance was in your sons name and hence it is a reasonable assumption that your son is the main user.

In this instance a change was semingly made to the policy to insure a different vehicle. The insurance was to be in your husbands name, but the actual owner/keeper of the vehicle was evidently your son. This is known as fronting, whereby one takes out insurance - typically in a parents name, with a child as a named driver in order to reduce the insurance premium, when in fact the main user of the vehicle is the child. This is attractive as it will reduce the premium payable - and lets be honest, many of us have done this in the past - as it is an easy way to cut the cost of insurance. Your premium will have risen (sometimes significantly) with your son being a named driver, but the insurers will not have fully weighted the premium on your son, as they believed that he was not the owner/keeper/main user and hence only an occasional user of the vehicle.

To cut a very long story short, there is no doubt in my mind that the insurers are perfectly justified in their actions and regrettably your appeal against their decision will not succeed.

I have almost ten years of experience in insurance claims, am professionally qualified and work for the 'fraud' department of a major insurance company and every day many claims are 'chucked out' for the very same reason as yours.

It may be no solace for you, but be grateful that the claim didn't involve another party and typically an injury, as every day I have to phone policyholders and tell them that their claim is void and even for a small accident, the solicitors costs, injury and uninsured loss settlements, credit hire for the third party as well as vehicle repairs can cost many more times than that of your loss. Nowadays it is commonplace for the the credit hire invoice for a third party's replacement vehicle to cost tens of thousands of pounds, even into the hundreds of thousands for a prestige vehicle!!!!

You may have a civil claim against the brokers as they are paid to ask the right questions, but the maxim of utmost good faith still applies and I suspect that you will be unsuccessful in that claim also, however it is shrewd to request a transcript or a tape recording of the discusssions with the brokers regarding the change of vehicle, as it is not unheard of for brokers to sometimes disregard what has been told to them in order to ensure a lower premium (and hence more commission for themselves).

Good luck though and keep us posted as to how to how your appeal progresses

[stuthesaint]

I believe that I can clarify this matter for you.

There are many issues here which may be addressed, but the most salient comes down not so much to that of insurable interest, but of the maxim of the utmost good faith.

This maxim which is applicable to all contracts of insurance effectively means that you must disclose any relevant points to the insurance company, even if you are not asked.

From the insurers point of view, they have been presented with a £10k theft claim and they will effectively do whatever they are legally entitled to do to avoid the claim, in this instance even the policy as a whole (since inception, or change of details).

Most people when taking out a policy of insurance don't fully appreciate the possible consequences of the contract to which they are entering. Everything and anything that may affect the policy of insurance must be disclosed.

Regardless of the vague reasons that the insurers have given you for avoiding the policy, I can assure you that it would have been due to the fact that the finance was in your sons name and hence it is a reasonable assumption that your son is the main user.

In this instance a change was semingly made to the policy to insure a different vehicle. The insurance was to be in your husbands name, but the actual owner/keeper of the vehicle was evidently your son. This is known as fronting, whereby one takes out insurance - typically in a parents name, with a child as a named driver in order to reduce the insurance premium, when in fact the main user of the vehicle is the child. This is attractive as it will reduce the premium payable - and lets be honest, many of us have done this in the past - as it is an easy way to cut the cost of insurance. Your premium will have risen (sometimes significantly) with your son being a named driver, but the insurers will not have fully weighted the premium on your son, as they believed that he was not the owner/keeper/main user and hence only an occasional user of the vehicle.

To cut a very long story short, there is no doubt in my mind that the insurers are perfectly justified in their actions and regrettably your appeal against their decision will not succeed.

I have almost ten years of experience in insurance claims, am professionally qualified and work for the 'fraud' department of a major insurance company and every day many claims are 'chucked out' for the very same reason as yours.

It may be no solace for you, but be grateful that the claim didn't involve another party and typically an injury, as every day I have to phone policyholders and tell them that their claim is void and even for a small accident, the solicitors costs, injury and uninsured loss settlements, credit hire for the third party as well as vehicle repairs can cost many more times than that of your loss. Nowadays it is commonplace for the the credit hire invoice for a third party's replacement vehicle to cost tens of thousands of pounds, even into the hundreds of thousands for a prestige vehicle!!!!

You may have a civil claim against the brokers as they are paid to ask the right questions, but the maxim of utmost good faith still applies and I suspect that you will be unsuccessful in that claim also, however it is shrewd to request a transcript or a tape recording of the discusssions with the brokers regarding the change of vehicle, as it is not unheard of for brokers to sometimes disregard what has been told to them in order to ensure a lower premium (and hence more commission for themselves).

Good luck though and keep us posted as to how to how your appeal progresses

[stuthesaint]

Hi Patian.

That is exactly what 'fronting' is - having the policy in the name of a lesser risk, when in fact it is meant for the higher risk - i.e. your son.

 

I do not understand what JonChris is trying to say. Of course your son was named on the policy, otherwise we would be looking at a totally different scenario here, but the material facts are that the car was effectively owned by your son (it was his car) and if that was not declared then they would assume that your husband was the main user. A major underwriting criteria is whom is the main user of the car. It is logical, if your son was an occasional user of the car, then of course the premium would increase as a less experienced driver is using the car on occasion and hence the insurer is exposed to a greater risk, however if your son was the main user of the car then that risk proportionately increases - and this info they were seemingly not made aware of in this instance. Whether that is the fault of you, or the broker is a different matter entirely, however as previously advised the maxim of utmost good faith aplies still.

It is incorrect that the premium is calculated solely on the credentials of the least experienced driver. Of course that is an element, but his/her usage is a major contributor too.

Whilst I do not believe that it will help you resolve the situation, you do not say how much no claims bonus (discount) was applied to the policy as a result of your husband being the 'insured', as this is also a major factor in the underwriting decision.

You mentioned confused.com, however this is simply an insurance aggregator, asking a wide range of questions in order to fill out the

boxes on many insurance companies internet forms. All of these insurers may word their questions differently and hence the range of questions asked. Others have crticised my answer, however, whilst mine may be an opinion, it is an extremely educated one - and whilst you may possess documents stating that the claim is avoided due to a non-disclosure of the regd keeper/owner of the vehicle, they all effectively amount to the same thing - that the insurers were not told of who the owner/keeper was (possibly by the brokers) - hence fronting - and that they are well justified in repudiating the claim.

Whether it is fair is a different matter entirely and your best bet is to plead ignorance and complain internally rather than through the FSA, as whilst the insurers may pay for an FSA claim to be investigated - this is not in your, or any other persons best interests, as your collective policies will simply increase as a cumulative effect. As I previously advised, your best bet for success is to pursue the brokers (all telephone calls recorded) and to see if you actually disclosed the fact that your son was paying for the car and would be the main user.

 

Good luck.