The court was asked whether insurers could avoid a policy by reason of the creation by one of the insured hotel’s directors of false invoices intended to create a more favourable picture of the hotel’s trading performance if it became desirable to show its accounts to its bankers. No actual use of the invoices had been made. The issue was whether the matters were nevertheless material to be known to a prudent insurer in the claimant’s position upon the renewal of insurance, the onus being on the insurer to establish this.
Mance J discussed what is embraced by ‘risk’ in the context of avoidance for material non-disclosure: ‘It is not simply the peril or possibility of loss of damage occurring within the scope of the policy. It embraces other matters which would, if known be likely to influence a prudent underwriter’s decision. It includes what is known as ‘moral hazard’ which may merely increase the likelihood of it being made to appear (falsely) that loss or damage has occurred falling within the scope of the policy . ..’
Judges:
Mance J
Citations:
[1998] Lloyd’s Rep IR 151
Citing:
See also – Insurance Corporation of Channel Islands Limited and Another v Royal Hotel Limited and others CA 14-Feb-1997
A speedy trial had been agreed. One defendant was unable to put its solicitors in funds, and sought a release of the date to allow time to get funds together. . .
Explained – Pan Atlantic Insurance Co Ltd and Another v Pine Top Insurance Co Ltd CA 1993
Steyn LJ said that ‘avoidance for non-disclosure is the remedy provided by law because the risk presented is different from the true risk. But for the non-disclosure the prudent underwriter would have appreciated that it was a different . . risk’ . .
Cited – Pan Atlantic Insurance Co Ltd and Another v Pine Top Insurance Co Ltd HL 27-Jul-1994
The plaintiff had written long term (tail) insurance. The defendant came to re-insure it. On a dispute there were shown greater losses than had been disclosed, and that this had been known to the Plaintiff.
Held: ‘material circumstance’ which . .
Cited by:
Cited – Sharon’s Bakery (Europe) Ltd v Axa Insurance UK Plc and Another ComC 9-Feb-2011
The insurers refused a claim for fire damage alleging that the insured had created a false invoice for use as evidence of title in a separate transaction when seeking finance. . .
Cited – Sharon’s Bakery (Europe) Ltd v Axa Insurance UK Plc and Another ComC 9-Feb-2011
The insurers refused a claim for fire damage alleging that the insured had created a false invoice for use as evidence of title in a separate transaction when seeking finance. . .
Lists of cited by and citing cases may be incomplete.
Insurance
Updated: 15 May 2022; Ref: scu.430087