Whether negligence in non-disclosure of some information justified to
cancellation of policy
In August 1999, Mrs. A insured her new
brought car by buying auto insurance from an insurance broker. However, the car
was stolen in June 2001. Immediately, she contacted the firm to file a claim. The
firm had discovered that she had a total of four convictions for speeding. Three
out of the four convictions were occurred in September 1994, September 1995 and
April 1996 in which she had been convicted for driving faster than 30 mph in a
30 mph speed limit area. The fourth conviction was occurred in March 2000 when she
was convicted for exceeding a 60 mph speed limit. The firm rejected Mrs. A's
claim because she had not mentioned the convictions when she brought the policy.
The firm said that both when she was first applied for the insurance, and again
when she had renewed the policy in August 2000, they had specifically asked
whether she had received any convictions for the past five years. Mrs. A
convinced that the broker had completed the proposal form for her and she had
simply signed it without reading the policy carefully. She said she had no
intention to conceal any information from the firm. However, since her offences
were relatively minor, she considered that even if she had told the firm about her
convictions, the firm would still have insured her.
Analysis
The
question on the policy about the convictions was clearly stated. Although it
was the broker who had completed the policy, Mrs. A should have checked the
details in the policy thoroughly before she signed it. However, in this
situation, the firm considered her failure to expose her convictions was an
oversight and not her attempt to conceal those convictions from the firm. The
firm also agreed that the convictions were considered minor. They also agreed
that the firm would still have insured her if they had known about those
convictions. However, the firm said that they would charge her 12% more for the
premium that she had to pay and charged a further of 5% when she renewed her
policy in 2000. In this situation, her failure to disclose her convictions had led
to that she paid less than what she had to. In the circumstances, a fair and
reasonable settlement was needed to meet the claim on a proportional basis. Therefore,
the firm had agreed to pay Mrs. A with 85% of the value of her claim.
Car was stolen from driveway – whether the firm had the right to reject
complaint on the ground of the customer’s negligence
Miss L's car was stolen from the
driveway of her home while she was inside the house. She didn’t saw and heard
the thief. When she claimed the losses
from firm, they asked her to send them her car keys. Unfortunately, she was
only able to produce the spare ignition key. In this situation, the firm
rejected her claim because the key may have been in or on the car when it was
stolen. Miss L had breached the condition of her policy which is “exercise
reasonable care in safeguarding her car”. However, Miss L defended herself by
claiming that her car key was lost a month earlier and she had been using the
spare key. She insisted that she had not been careless in this situation as the
firm had suggested.
Analysis
Miss L
might not been so careless. Miss L could had not done this, so the firm was
wrong to jump into conclusion and said that she had breached the condition of
the policy. However, the firm's policy contained a specific clause which
excluded the claims for cars stolen when the keys were left in the car. The
firm had specifically highlighted this clause when the policy was sold Miss L. Besides,
Miss L’s explanation regarding that she had lost the original car key was not
concrete enough and so the firm presumably that the car key was left in or on
the car. Unfortunately for Miss L, the circumstances of this thief fall within
the scope of that exclusion. In addition, the fact that her car was parked at
the road side was relatively vulnerable for the thief to take the opportunities.
Therefore, Miss L could not claim for the losses of her car.
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