Undeclared 'Modifications' - car insurance

raskazz

The short answer is yes, they can say that they will only deal with the claim subject to the additional premium and increased excess.

The FOS has published extensively on how they view cases of non-disclosure, see:

http://www.financial-ombudsman.org.uk/publications/ombudsman-news/61/61-insurance.htm

http://www.financial-ombudsman.org.uk/publications/ombudsman-news/46/46_non_disclosure_insurance.htm

In your case, the only real question is whether clear questions were asked at the time you were quoted and at the time you incepted the policy.

A has been mentioned by other posters, many insurers specifically state that any changes whatsoever from the base model must be declared. This would clearly include optional extras. Reason being is that (for example) a body kit, spoiler and alloys which are a factory option clearly raise the risk just as much as the same items fitted after sale.

It is not relevant that the modifications were not directly linked to the loss. The issue is not one of breach of warranty or condition (where the breach must be in some way causative of the loss in order for the insurer to rely on that warranty or condition to reject the claim), it goes deeper than that. The contract is founded on utmost good faith - i.e. you know all the facts relating to the risk and the insurer relies on you honestly disclosing all relevant facts accurately.

As you did not disclose all relevant facts accurately then they are entitled to 'rewrite' the policy and apply the terms that they would have applied at inception had they known the true facts. This is in accordance with the FOS guidance linked to above.

It may seem a large increase in premium/excess but a lot of direct insurers 'and direct style' intermediaries basically cherry-pick what they see as good business - experienced drivers, good claims/conviction history, sensible cars. To discourage stuff like modifications they load the premium/increase excesses and so they know that where they do pick up risks which are outside their 'preferred' criteria they are at least getting a decent premium for it.

raskazz

mikey72 wrote: »

If you go out and fit alloy wheels to your car yourself, yes, that's a modification, but not if it's part of the car when you buy it from the manufacturer.

That's all well and good but how you personally define 'modification' is not important - what is important is how the insurer defines it, i.e. how the question is asked when the quotation is given and when the policy is set up and whether the question is clear and unambiguous.

raskazz

The_Maestro wrote: »

Sorry but I don't see how they have incurred a loss unless the optional extras increased the insurance risk in respect of the particular accident. I'm not asking for them to pay-out for the extras as part of the settlement figure after all.

It is obvious how a loss was incurred (quite apart from the claim) - the incorrect premium was paid for the insured risk. It's quite simple.

Would you prefer them to say, OK, you only paid 80% of the correct premium, thus we will only deal with 80% of the claim (i.e. settle by paying you 80% of the market value of your car)?

The_Maestro wrote: »

Also I bet if I bought the same car as a replacement with standard wheels and then asked them to reduce the excess back they wouldn't do it.

This is an assertion which is not backed up by any evidence.

Quote

Oscar_The_Grouch wrote: »

Having alloy wheels...doesn't make a car any faster

They're lighter, non?

The_Maestro

olly300 wrote: »

It's not about this particular accident it's about all possible accidents that could have happened to cause them to pay out.

All this particular accident did was notify the insurers that the OP hadn't insured their car correctly and complied with their terms and conditions about notifying them about what this insurer defines as modifications.

How is it a risk if the time has already passed, and the risk (e.g. theft due to attractive alloys) has not been realised? If it had been stolen then they would not have paid out because of the undeclared alloys so they did not even insure against that risk in the first place. In contractual terms I have received no service or benefit from them in terms of insuring the alloys or any risk associated with the alloys because those risks were not insured!

raskazz

The_Maestro wrote: »

How is it a risk if the time has already passed, and the risk (e.g. theft due to attractive alloys) has not been realised? If it had been stolen then they would not have paid out because of the undeclared alloys so they did not even insure that risk in the first place.

No. You are wrong on this point.

If it had been stolen then they would have dealt with it in exactly the same manner as they are now - i.e. as the non-disclosure was inadvertent they would have settled your claim subject to the policy being rewritten to add the extra premium and higher excess.

raskazz

The_Maestro wrote: »

in contractual terms I have received no service or benefit from them in terms of insuring the alloys or any risk associated with the alloys because those risks were not insured!

In contractual terms you have benefited because you breached the requirement of utmost good faith and so paid a lower premium than was correct for the risk. The risks that you mention were insured - subject to the correct premium and excess applying.

dunstonh

Sorry but I don't see how they have incurred a loss unless the optional extras increased the insurance risk in respect of the particular accident.

Because, putting it in plain black & white, you obtained insurance and paid a premium based on fraudulently supplied information.

They agreed a premium you should pay for a level of risk they were willing to take when in reality the risk they were taking was greater.

The FOS have published guidelines which clearly lay out how non-disclosure should be dealt with and you are correctly being treated based on what you have said.

mikey72

"Accessories

Parts or products specifically designed to be fitted to your vehicle. We may treat some accessories as modifications, so please tell us about any alterations to your vehicle."

That's the only clause in mine. Nothing on optional extras at all, but I have declared the tow bar as an accessory. (They didn't want to know).
I didn't mention the car mats, now I come to think about it though. Or the touch up paint in the glove locker.
(But both are listed as accessories in the brochure)

The_Maestro

raskazz wrote: »

No. You are wrong on this point.

If it had been stolen then they would have dealt with it in exactly the same manner as they are now - i.e. as the non-disclosure was inadvertent they would have settled your claim subject to the policy being rewritten to add the extra premium and higher excess.

This greatly benefits people who have massively modified their cars and had an accident/loss. You can increase a car's value by ~50% by specifiying options - possibly 10s of thousands of pounds and if you had an insurance write off you would only have to pay the price of the increased premium. In my case the increases to the premium and excess are far higher than the agreed 2nd hand value of the optional extras. If true, what you are saying encourages people to obtain insurance cover for a vehicle at the lowest possible amount with minimal disclosure and then only disclosing in the event of an accident (if its noticed and they are unluckly). I think I may de-reg my car with the DVLA and drive on full liability without insurance or tax since this legislative nonsense is just a scam.