Everyone who takes out an insurance policy is obliged to disclose all facts that may be relevant to the insurer’s assessment of the risk it is taking. In a case exactly on point, a company whose boss kept his criminal past to himself was lawfully refused cover following a disastrous fire.
The businessman had twice served prison sentences for offences ranging from racially aggravated harassment to obstructing a constable and assault occasioning actual bodily harm. None of those convictions had been disclosed to his company’s insurer before the fire broke out, destroying all its stock.
There was, in the circumstances, no dispute that the insurer was entitled to avoid the company’s commercial combined insurance policy. However, the company launched proceedings against the brokers who had arranged its cover, claiming that the businessman and his wife had several times informed them of his convictions but that they had failed to pass that information on to the insurer.
In dismissing the company’s claim, however, the Court found that the brokers had been unaware of the convictions prior to the fire and that both the businessman and his wife had given untruthful evidence. Arguments that the brokers had failed to draw to their attention the importance of disclosing the convictions were also rejected. The need to check the accuracy of information disclosed to the insurer had repeatedly been made clear to them and it was entirely obvious that disclosure of the convictions was required.