Insurer calling us "fraud" and trusting thie contractor over loyal customer

jasoo

[FONT=&quot]leakage from bath leading to damage to bathroom floor and kitchen ceiling / units.[/FONT]

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[FONT=&quot]INSURER AT FULT:
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[FONT=&quot]1)[FONT=&quot] [/FONT][/FONT][FONT=&quot]Bathroom[/FONT]
[FONT=&quot]Insurer said they would only pay for replacement of 1 row of damaged tiles.[/FONT]
-[FONT=&quot] [/FONT][FONT=&quot]after disputing this they[/FONT][FONT=&quot] agreed to retile the whole of that wall. again we had to disoute - leading to them agreeing [/FONT][FONT=&quot]to retile the rest of the walls but we would have to pay towards it. which we finally agreed.[/FONT]
-[FONT=&quot] [/FONT][FONT=&quot] [/FONT]
[FONT=&quot]the work carried out was left in poor standards. The floor tiles were protruding out causing toes getting caught and footwear being torn. Contractor were approached by us who said the tiles we chose were inappropriate but it is not up to them to advise us, however offered to return to re grout the uneven surfaces. (which they have not done untill given go ahead from insurer)[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]We were asked by contractors to sign a form without any figures / description to say that work was completed and satisfactory. Upon requesting a breakdown of costs we noticed they were exaggerating the figures by charging for a larger surface area of the bath When questioned they admitted that we were right and agreed to change the figures. Furthermore, they charged well over market value for other duties. Eg. To take off light bulb by switching off the main supply and refit the bulb cost over £30. Non qualified workers switched off the home security alarm whilst trying to find the correct main supply switch – leading to house being insecure for 2 days. [/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]2)[FONT=&quot] [/FONT][/FONT][FONT=&quot]Kitchen[/FONT]
[FONT=&quot]When wall units were taken down by what looked like non experience / qualified worker – they advised insurer it was reusable.[/FONT]
[FONT=&quot]-We had to fight our case again by getting independent advice who said they clearly were not reusable. [/FONT]
[FONT=&quot]-Insurer finally agreed to pay for wall units.[/FONT]
[FONT=&quot]-We said the floor units should also be replaced as it would not look coordinated.[/FONT]
[FONT=&quot]- They finally agreed to go pay 50% towards the cost of floor units.[/FONT]
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[FONT=&quot]WE FEEL THAST THEY ATTEMPTED TO SHORT CHANGE US ALL THE WAY
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[FONT=&quot]OUR FAULT
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[FONT=&quot]Insurer had agreed to pay hotel accomodation ( about £110 per day) whilst work was being carried out PLUS (£25)Food allowance. Bothe children were upset by this and we stayed at relatives after more than one attempt to book /cancell hotel accommodation. We[/FONT][FONT=&quot] didn't inform insurer that we had changed our mind and allowed them to pay us for hotel cost as we thought the cost was simmilar ( infact we saved them money by agreeing to stay in family room and not 2 seperate rooms - which would have cost almost double)
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[FONT=&quot] Insurer is accusing us of FRAUD and exageration of claim and demanding back all hotel cost and costs of work carried out.
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[FONT=&quot]The invoice provided by thier contactor was completely inaccurate and exagerated. when we questioned this - contractors re measure work carried out and admitted that they had charged us for inaccurate measurment of bathroom and that some of the work was incomplete.[/FONT]
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[FONT=&quot]What do you feel should be the outcome?[/FONT][FONT=&quot] as everyone has tried to short change everyone else and insurer has accused us of fraud but not thier contractors.
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[FONT=&quot]Even if we did pay up - it would mean i am paying insurer for non satisfatory completion of work.
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[FONT=&quot]Thanks for your time in reading such a long note.
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FlameCloud

Ignore what the contractors have done at this stage- that will be between the insurer and their contractor to decide and will not affect the claim.

There is clear case law regarding the issue of fraud on a claim- specifically Direct Line v Khan & Khan (2001) and Galloway v Guardian Royal Exchange (UK) Limited (1999).

Guardian v GRE confirmed that fraud on any part of the claim taints the entire claim, allowing the insurers to avoid the claim and thus recover any funds applicable. DL V Kahn even deals with the aspect of fraud on the accommodation aspect of a claim and again the insurer was allowed to avoid the entire claim.

They are in the light legally, however you only real hope would be an FOS complaint, however they are getting far harsher recently on proven issues of fraud on claims.

ben500

Good luck with the ombudsman, I'd say your lucky they don't prosecute, by the way your problems are only just starting as you will find it incredibly difficult to obtain insurance again, certainly at a reasonable price anyway, you claimed for living expenses you did not incur, there is no official body that is going to support your fight against the insurance company I fear. Incidentally they could theoretically void any previous successful claims for the duration of the policy and reclaim those monies also, but this is very very rarely done.

FlameCloud

They would be hard pushed to take back all claims- Fargnoli v GA Bonus plc (1997) and Axa v Gottlieb (2005) have both confirmed that insurers cannot recover genuine claims under the policy provided they were before the fraudulent claim.

ben500

I stand corrected then.
Do you have a reference for AXA v Gottlieb please, I'd like to take a look at that one.

It's ok I've found it now thanks

Looking at AXA v Gottlieb I don't see any ruling prohibiting total recovery, it would seem that AXA merely pursued recovery under common law rather than utmost trust, there is nothing to say that had they gone down the avenue of utmost trust they would not have been successful, they simply kicked for the corner and hit the crossbar.

As far as I'm aware Fargnoli vs GA is a commercial case and the differences are vast to that of a personal lines policy. Feel free to educate me as I no longer have access to sources authoritive on such matters.

ben500

To the op I'm not sure about your understanding of the term "loyal customer"

FlameCloud

No problems- below is from the literature I was given when doing my ACII's. I wouldnt say that it being a commercial claim would have any bearing on the precedents set down- I certainly cannot recall any cases where a commercial claim was ruled differently to a personal lines one simply because of the nature of the policy holder. Am about to start writing my FCII project so if you do know of any I would be grateful!

Fargnoli v GA Bonus plc (1997)


Key Principles

Fraud at the time of claim does not permit an insurer to void a policy ab initio. The policy can only be rescinded from the date of a fraud. An insurer may only void a policy where the fraud relates to the original proposal or renewal.

Circumstances

This was a Scottish case brought after Fargnoli submitted two separate claims for fire damage in August and September 1995, both of which were declined by insurers, who also sought to void the policy.

The fraud condition in the policy was identical to that in the ABI Standard Fire Policy and was worded:

• “If any claim is fraudulent in any respect or if fraudulent means are used by the insured or anyone acting on his behalf to obtain any benefit under this policy or if any damage is caused by the wilful act or with the connivance of the insured, all benefit under this policy shall be forfeit.”

The second claim was proven to be fraudulent, the fire having been caused either by a wilful act on the part of Fargnoli or with his connivance. The insurer argued that “all benefit” under the policy became forfeit, which they interpreted to include the claim in respect of the August fire. G A Bonus were unable to put forward evidence that the first fire was fraudulent.

Outcome

The court held that at common law, a material breach of the fraud condition would allow the innocent party to cancel the policy but that such cancellation would not absolve the innocent party from any obligations already due for performance at the time of such cancellation.

In this case, G A Bonus could cancel the policy and avoid payment for the September fire damage but they would still be liable for the August claim, as this pre-dated the fraud.

An insurer could not void a policy ab initio because of a post-inception fraud. It was held that fraud was a “repudiatory” breach of contract, which only entitled the insurer to rescind the policy. Where fraud relates to a claim, a valid binding contract exists up to and including the occurrence of damage and until the fraudulent claim is made; but, as this policy also covered business interruption, breakage of fixed glass, loss of money, employer’s liability, public and product liability, loss of frozen food and loss of licence, the practical consequence of forfeiture could be far reaching if the phrase “all benefit ... shall be forfeit” were to have retrospective application. The court found that this was not what was meant by the phrase.

As all insurance contracts are contracts of utmost good faith, any claim tainted by fraud cannot have any validity. Thus, the second claim was properly repudiated.

References

• (1997) Re LR 374
• (1997) SCLR 12
• (1997) CLC 653

jasoo

ben500 wrote: »

Good luck with the ombudsman, I'd say your lucky they don't prosecute, by the way your problems are only just starting as you will find it incredibly difficult to obtain insurance again, certainly at a reasonable price anyway, you claimed for living expenses you did not incur, there is no official body that is going to support your fight against the insurance company I fear. Incidentally they could theoretically void any previous successful claims for the duration of the policy and reclaim those monies also, but this is very very rarely done.

Thanks for your input. we did incur living expense by staying at relatives but teh insurer feels it should have been less. Simmilarly we feel that the money they are demanding back under fraud should be less as they have mis miseared etc.. should we expect them to revisit the invoice figures and to come and assess the standard of work carried and the H&S implications of it before paying them back? I know they will accept that the standard of work is poor - in which case should we be giving them a telling off as well? after all they have accepted figures from contractors without checking the work themselves?

jasoo

loyal customer being - we've been insure with them for 9 yrs without making any claims

ben500

OK I'm a little confused here, both cases seem to have been pursued under "common law" rather than "utmost faith" I'm not sure why this is, whether it was by choice as the complainants envisaged a more favourable outcome or if there was an imposition due to criteria, it is clear the policy cannot be recinded from inception under common law but this is not the case for utmost faith, the ruling goes on to mention that all policies are made in utmost faith.

As all insurance contracts are contracts of utmost good faith, any claim tainted by fraud cannot have any validity. Thus, the second claim was properly repudiated.

My knowledge is not extensive enough to understand this anomaly. There are some insurance wizards on here hopefully someone will come along and explain.

ben500

jasoo wrote: »

loyal customer being - we've been insure with them for 9 yrs without making any claims

But irrespective of the time you have had policy with them you have now made a fraudulent claim, this is hardly conducive with loyalty.