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Material non- disclosure ends landlord’s fire insurance claim

Insurance policies of any type are not worth the paper they are written on if you fail to make full and frank disclosure of all facts that might affect the risk that you wish to guard against. A property landlord found that out to his cost after neglecting to tell insurers that he was facing trial on an assault charge.

The man lodged a claim with insurers after a property that he let to students was gutted by fire. The proposal form for the insurance had specifically asked if he had any previous convictions or pending prosecutions, save in respect of motoring offences. He answered that question in the negative although he was at the time awaiting trial on a common assault charge. He was subsequently convicted of that offence and received at £100 fine and a 24-month restraining order.

He launched proceedings against the insurers after they refused to indemnify him against his loss. His claim was, however, dismissed by a judge on the basis that it had no reasonable prospect of success. His non-disclosure of the pending prosecution was material and the insurers were entitled to refuse cover.

In dismissing his challenge to that decision, the Court of Appeal found that he had no viable argument that the relevant parts of the policy were unenforceable by virtue of the Unfair Terms in Consumer Contracts Regulations 1999. The policy was commercial in nature, in that he was letting the property to student as a business, and he could not be viewed as a ‘consumer’ within the meaning of the Regulations. The insurers thus had an unanswerable defence to his claim.