Law report: Claim fails over fire at property

Alan Bate v Aviva Insurance UK
Queen's Bench Division, 17 June 2013

The claimant was a property surveyor, consultant and loss assessor with considerable knowledge of the insurance industry. He held a domestic property policy with the defendant.

On 5 June 2006, a fire occurred at the claimant's property. The defendant reserved its rights two days later and on 21 August 2006 wrote to the claimant to avoid the policy. The claimant brought a claim for indemnity and damages.

The defendant alleged the claimant had failed to disclose and/or misrepresented material facts and had breached a condition precedent to liability. The judge found that the claimant had misrepresented or failed to disclose that he had been running businesses from the property, he had claimed for fire damage against his previous insurers and they had repudiated liability, the ownership and use of the property was complex and unusual, and the property was being developed.

The judge agreed that this constituted a material fact and Alan Bate's claim failed.

Comment
Under the Financial Services Authority's Insurance: Conduct of Business Rules an insurer cannot unreasonably reject a claim by a retail customer on grounds of non-disclosure or misrepresentation of a material fact if the customer could not reasonably be expected to have disclosed it. The judge held that, given his background, this claimant had understood the duty of disclosure and had acted dishonestly in relation to the defendant. Therefore, the defendant could reasonably avoid the policy on these grounds. Alternatively, the defendant could repudiate the claim for breach of condition precedent to inform it of development of the property.
Hannah de Haan

This article was published in the 1/8 August 2013 edition of Post magazine