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Filling in an Insurance Proposal Form? Be Accurate and Honest!

In a cautionary tale that underlines the need for absolute accuracy and honesty in filling out insurance proposal forms, a businessman whose magnificent home was gutted by fire will not receive a penny in compensation after the High Court ruled that his insurance policy was not worth the paper it was written on.

Victorian Town HouseThe businessman’s Victorian home, which was built for a wealthy mill owner and set in a substantial estate, was almost entirely destroyed by the blaze. In reliance on his buildings insurance policy, he put in a claim for more than £3 million – including £1.2 million in respect of re-building costs, £155,000 for destroyed contents and damages for distress and inconvenience – with Aviva Insurance UK Limited.

In dismissing his claim and ruling that Aviva was entitled to avoid liability under the policy, the Court found that, in completing the proposal form, the businessman had, amongst other things, given a ‘false picture’ of an earlier incident in which £50,000 damage was caused to the property when a builder cut through a power cable. He had also failed to disclose that businesses were being operated in garages on the estate and that the property was undergoing commercial development at the time.

Whilst acknowledging that the businessman was under severe financial pressure and in poor health, the Court also found that he had ‘knowingly lied’ in his sworn evidence and had resorted to a ‘dishonest scheme’ and a ‘deceitful device’ in his desperation to uphold the validity of the policy.

There was no dispute that the fire was accidental and the businessman’s lawyers had told the Court that it was a ‘personal catastrophe’ for him. After his attempts to split the property into units and sell them on had failed, it was repossessed by lenders, leaving him homeless and severely indebted.