Jones v Zurich Insurance Plc

A claimant under an agreed-value insurance policy must prove a loss falling within the policy, but need not disprove fraud unless fraud is alleged. A court may assess oral evidence against contemporaneous documents, admitted facts and inherent probabilities while considering all the evidence.

Under the Consumer Insurance (Disclosure and Representations) Act 2012, an insurer seeking to rely on a deliberate, reckless or dishonest misrepresentation must plead that case distinctly. A misrepresentation is qualifying if the insurer would not have contracted or would have contracted on different terms. Avoidance requires proof that the insurer would not have contracted at all.

The claimant sought £190,000 under an agreed-value policy for a Rolex Daytona Tropical watch, alleging that it had been lost while he was skiing in Aspen on 30 March 2019. The insurer disputed whether the loss and its circumstances had been proved and sought to avoid the policy because the claimant had failed to disclose a previous £15,000 jewellery claim.

The policy was a consumer insurance contract within the Consumer Insurance (Disclosure and Representations) Act 2012. The insurer had pleaded a careless misrepresentation, but not a deliberate, reckless or dishonest one. The issues were whether the loss was covered, whether the misrepresentation breached the duty of reasonable care, and what underwriting decision would have been made had the previous claim been disclosed.

1. Loss. The claimant proved, on the evidence as a whole, that he lost the watch while skiing on 30 March 2019 and reported the loss to the hotel, resort operators and police. His inconsistent accounts affected credibility but did not displace the corroborated fundamentals of the claim. Since the insurer had not alleged fraud or advanced a case that the watch was lost outside the policy’s specified circumstances, the claimant was not required to prove that the loss was non-fraudulent. A loss while skiing and wearing the watch was capable of falling within the policy.
2. Pleading of misrepresentation. An insurer seeking to establish that a misrepresentation was deliberate or reckless must plead that case distinctly. The same applies to an allegation that the misrepresentation was dishonest for the purposes of section 3(5) of the Consumer Insurance (Disclosure and Representations) Act 2012. Zurich therefore had to proceed on the pleaded case of carelessness.
3. Misrepresentation and breach. The repeated representation that no claims or losses had occurred in the preceding five years was false. It was supplied through the claimant’s brokers and remained uncorrected in the Statement of Fact. The claimant and his assistant knew that it was wrong. The representation was consequently made in breach of the statutory duty to take reasonable care.
4. Qualifying misrepresentation and remedy. The previous claim was material to the underwriting decision, particularly because it concerned jewellery and the proposal was heavily weighted towards valuable jewellery. The evidence showed that Zurich would probably have declined the risk had the claim been disclosed. The misrepresentation was therefore qualifying under section 4(1), and Zurich was entitled to avoid the policy under Schedule 1. The insurer had to return the premium.
5. Disposition. The claim for indemnity was dismissed.