Insurance - incorrect proposal details: outcome?

[CAPP0]

ETA: Have just realised this is in the wrong section, click error on my part, could a mod move it to SPL please?


Not after a witch-hunt here, just some factual responses please, so if mudslinging is your game, please play it elsewhere.

Someone I know (definitely not me, he's half my age) did not fill in his insurance proposal accurately, and has since had a fault accident from which the insurance assessor has said that his car is beyond economic repair. The accident occurred about 5 weeks ago. The car was assessed at a premises of the insurance company's choice around a week later (he drove the car there) and the insurance company retained the car since at that point the discrepancies were not known of. They still have his car although it is known to now be at a salvage yard. There was also damage to the 3rd party car.

The errors/omissions on his proposal were:

- aftermarket air filter fitted (to be fair this was on the car when he bought it)
- has exceeded his declared annual mileage. I'm not sure how much by but he had to state the mileage when he took out the policy
- did not declare commuting. The accident happened during his commute and he was daft enough to tell them this

My expectation is that the air filter would just result in a slight reduction in payout, but the other two items seem rather more serious to me? Can anyone offer any view as to how the claim is likely to proceed? He does realise he's in a bad place. On the assumption that the ins co will not pay out on his claim, he would like the car back, but I guess there will be storage costs. Since he did not ask for the car to be taken to a salvage yard, and could have stored it at home, assuming worst case where the ins co say PFO, who will be liable for the storage in order for him to get the car back (when I saw it after the accident, my view was that it could fairly easily be patched up in a safe, useable manner)?

Thanks.

Edited by CAPP0 on Tuesday 30th December 13:47

[anonymous-user]

Worst case, they might decline to pay for his costs, settle any third party claims and then come back to him to try to recover those losses.

If they do refuse to cover his damage, I would have thought he would get the car back.

Was there a third party in the accident?

[anonymous-user]

A lot will depend on the insurer and the policy terms (e.g. is it a limited mileage policy and if so what does the policy say about exceeding the declared mileage)

If they do repudiate he will be liable for all the costs incurred in so far, including recovery and storage.

I'd say it looks like repudiation is on the cards.

Any other vehicles involved?

[CAPP0]

Yes, he ran into the back of someone, they (not unreasonably) got their quote from a main dealer and I gather it ran to something like £1500.

I was thinking that may be the outcome. I guess in the circumstances the ins co are likely to completely deny the claim for his own car? Or do they have some sort of sliding scale where they reduce the payout accordingly?

Would he have any comeback re the storage costs, since he didn't ask them to take it away or store it, that was their decision (albeit probably before they had all the facts)?

Edited by CAPP0 on Tuesday 30th December 13:46

[CorradoTDI]

I think the main issue here was he was commuting and was not insured for that - I very much doubt they'll pay!

[Nezquick]

As said above, worse case scenario is that they refuse to indemnify him and pay out the TP claim and then try to recover any money from your pal.

I've seen it before though where the insurer will simply give the person the option of "topping up" their premium to what it would have cost had they given correct mileage details, declared the mods, declared commuting etc. He may be lucky and they may just do this.

It all depends on the insurer.

[sidicks]

Nezquick said:

As said above, worse case scenario is that they refuse to indemnify him and pay out the TP claim and then try to recover any money from your pal.

I've seen it before though where the insurer will simply give the person the option of "topping up" their premium to what it would have cost had they given correct mileage details, declared the mods, declared commuting etc. He may be lucky and they may just do this.

It all depends on the insurer.

I can believe that might be offered in the case of the air filter (could genuinely not realise this was not standard) and the mileage (assuming only slightly over the agreed limit on a pro rata basis (few people's mileage will be uniform over the year), but certainly not given the deliberate attempt to defraud - using the car for commuting when not declared as such.

[CAPP0]

Thanks for the replies all, looks like his best option would be to offer to pay the premium increase and see what they say, they can only say No. Oh and to learn a large, probably expensive, lesson!

[sidicks]

CAPP0 said:

Thanks for the replies all, looks like his best option would be to offer to pay the premium increase and see what they say, they can only say No. Oh and to learn a large, probably expensive, lesson!

I'm liking this concept of retrospective insurance - you pay a premium for a much lower risk and then if it goes pear-shaped and you have an accident you can just upgrade to the amount you should have paid had you been honest about the actual risk the insurer would have been exposed to.

Not sure the insurers will be so happy with this...!

[CAPP0]

sidicks said:

CAPP0 said:

Thanks for the replies all, looks like his best option would be to offer to pay the premium increase and see what they say, they can only say No. Oh and to learn a large, probably expensive, lesson!

I'm liking this concept of retrospective insurance - you pay a premium for a much lower risk and then if it goes pear-shaped and you have an accident you can just upgrade to the amount you should have paid had you been honest about the actual risk the insurer would have been exposed to.

Not sure the insurers will be so happy with this...!

Quite possibly not! I hadn't heard of that before, just going on what was posted above!

[ZOLLAR]

desolate said:

A lot will depend on the insurer and the policy terms (e.g. is it a limited mileage policy and if so what does the policy say about exceeding the declared mileage)

If they do repudiate he will be liable for all the costs incurred in so far, including recovery and storage.

I'd say it looks like repudiation is on the cards.

Any other vehicles involved?

Pretty much this,

He gave permission for them to move the car when he initiated the claim via his acceptance of the policy, the insurance policy allows the insurer to deal with the claim as they see fit.
Insurers will have procedures in place to move cars to be kept safe etc
Now this is only a problem when the policyholder hasn't been truthful and indemnity issues arise, had he been honest in the first place this wouldn't be a problem.

[ZOLLAR]

CAPP0 said:

sidicks said:

CAPP0 said:

Thanks for the replies all, looks like his best option would be to offer to pay the premium increase and see what they say, they can only say No. Oh and to learn a large, probably expensive, lesson!

I'm liking this concept of retrospective insurance - you pay a premium for a much lower risk and then if it goes pear-shaped and you have an accident you can just upgrade to the amount you should have paid had you been honest about the actual risk the insurer would have been exposed to.

Not sure the insurers will be so happy with this...!

Quite possibly not! I hadn't heard of that before, just going on what was posted above!

Since the change in consumer law last year insurers are pushing more on proportional settlements as they can't void or repudiate a claim/policy had they covered the risk in the first place.
For example if you don't declare a speeding conviction resulting in you paying only 80% of the true premium the insurer will only pay out 80% of your vehicle, putting that into numbers if you have a £20,000 car then that non disclosed SP30 just cost you £4,000 (assuming that it adds 20% to the policy).

The retrospective payments on the insurance are usually only used when the car is repairable.

[dacouch]

sidicks said:

I can believe that might be offered in the case of the air filter (could genuinely not realise this was not standard) and the mileage (assuming only slightly over the agreed limit on a pro rata basis (few people's mileage will be uniform over the year), but certainly not given the deliberate attempt to defraud - using the car for commuting when not declared as such.

I agree, the air filter is possibly an innocent non disclosure although there's a chance the Insurer would not have offered cover had they known.

The mileage is similar eg probably be looked at as an innocent non disclosure.

The commuting (In my opinion is not a non disclosure but the a miss purchase) is the problem, he's not covered to drive the car for the use at the time of the accident so would generally not be covered. The commuting also throws up another problem in I assume the reason he's exceed his declared annual mileage is due to him commuting in the car to work each day. So this could be viewed as intentionally miss leading the Insurer on the mileage and / or how frequently he was commuting.

I'm guessing the Insurers will pull up other discrepancies now as most companies would now go through his declared details and check to ensure everything is correct.

[Red Devil]

^^This^^

http://www.financial-ombudsman.org.uk/publications...

[barker22]

Can the mileage thing really be proved though?
If I declare I do 7k a year and between MOT's it says 11k for instance. Who's to say someone didn't borrow my car every weekend and rack up an extra 4k miles(entirely possible)
Although looking at the OP's case it seems a fair cop that the lad didn't declare.
The air filter thing.....are we talking cone and elbow stuff or just a panel filter, if it's just a k&n panel type filter it would seem a little harsh to punish anyone on that basis.

[shep1001]

On my restricted milage policy if you go over the milage without paying an additional premium to buy more miles, the remainder of the policy is on a third party basis only.

[shep1001]

barker22 said:

Can the mileage thing really be proved though?
If I declare I do 7k a year and between MOT's it says 11k for instance. Who's to say someone didn't borrow my car every weekend and rack up an extra 4k miles(entirely possible)
Although looking at the OP's case it seems a fair cop that the lad didn't declare.
The air filter thing.....are we talking cone and elbow stuff or just a panel filter, if it's just a k&n panel type filter it would seem a little harsh to punish anyone on that basis.

Insurers aren't stupid. The insured would be asked to prove the person you had let use the vehicle had it covered on a separate insurance policy. If you could not do this either (a) you were clearly telling porkies (b) knowingly letting somebody drive uninsured (c) whoever was driving the car multiple times was committing TWOC so you would need to supply their details as the old bill are going to want a word.


Why do people bother paying a premium for the privilege of not being fully insured? If you can't afford the correct premium then you can't afford the car - its not rocket science.

[Nezquick]

sidicks said:

CAPP0 said:

Thanks for the replies all, looks like his best option would be to offer to pay the premium increase and see what they say, they can only say No. Oh and to learn a large, probably expensive, lesson!

I'm liking this concept of retrospective insurance - you pay a premium for a much lower risk and then if it goes pear-shaped and you have an accident you can just upgrade to the amount you should have paid had you been honest about the actual risk the insurer would have been exposed to.

Not sure the insurers will be so happy with this...!

I'm not saying this is likely to happen but I have known it happen in certain circumstances - like I said, it's all down to the insurer and whether their underwriters see this as a huge problem or not.

For instance, when I renewed my insurance, the difference in my premium when I said I either did or didn't need my car for commuting to work was £0. If the OP's is the same then where's the issue?

As I also said though that the worst case is a refusal to indemnify.

[martinbiz]

shep1001 said:

Insurers aren't stupid. The insured would be asked to prove the person you had let use the vehicle had it covered on a separate insurance policy.

Twaddle. They would have to prove nothing to the ins co, if they chose not to believe their insured then they would need to come up with evidence to support their assertion.

[dacouch]

Nezquick said:

I'm not saying this is likely to happen but I have known it happen in certain circumstances - like I said, it's all down to the insurer and whether their underwriters see this as a huge problem or not.

For instance, when I renewed my insurance, the difference in my premium when I said I either did or didn't need my car for commuting to work was £0. If the OP's is the same then where's the issue?

As I also said though that the worst case is a refusal to indemnify.

Arguably it's not non disclosure.

Non disclosure being asked "Do you have any convictions" to which you either yes or no and if no here's the details.

Selecting which class of use is a process of buying eg do you want just you to drive or you and your wife. In the same way you would select which class of use you want to opt for.

If you're outright asked a yes no question do you use your car to commute then it could possibly become an issue of non disclosure.

There are companies that would happily collect the correct premium for commuting and would deal with the claim and others who would just refuse.

If it's refused then it's always worth a punt to the Ombudsman