‘Collateral’ Lies Can’t Ruin Insurance Claims
What are ‘collateral lies’ concerning insurance claims? Basically it’s when someone making a claim exaggerates for personal gain, and not always financial gain. However, collateral lies in many cases never actually impact on the final result. This is the reason why the legal profession refers to them as ‘collateral’.
Exaggerating on insurance claims, or telling porkies as it’s usually known as, may not actually invalidate a claim. According to the Supreme Court, lying about a claim might not always affect the validity of the claim. In other words, people will always make claims but an exaggeration isn’t a total fabrication of that claim. Yet, isn’t this fraud?
How this story came about involves a Dutch cargo ship. It ran into problems after a flood into its engine room damaged the motor. By all accounts the crew claimed they could not investigate the alarm properly, because the cargo ship was rolling in heavy seas. The weather they said impacted on their efficiency.
However, the investigating court ruled that that actually accident came about because of the bad weather, so the lie was irrelevant.
But a judge in the original insurance claim case said the lie that the crew claimed the ship rolled in bad weather amounted to ‘fraudulent device’ and so invalidated the claim. The Court of Appeal upheld this judgement, yet the Supreme Court recently overturned it.
Why do people resort to using what is labelled as a ‘collateral lie’ in insurance claims? The reasons are numerous. Of course there is malicious intent for personal or financial gain, but this isn’t the only reason. Some people panic and may not entirely understand a legal process and wish to avert attention away from themselves. Other claimants may simply do so out of simple misguided behaviour. The point is, an insured individual is only trying to obtain what the law regards as his or her entitlement. Many such ‘collateral lies’ are irrelevant to the existence of any such entitlement, according to a High Court judge.
The ABI (Association of British Insurers) said it was looking at these findings carefully, and warned that innocent people may suffer as a result because insurance policies could become more expensive. James Dalton, the ABI’s director of general insurance policy recently argued that, “Lies are lies. Insurers will investigate all suspicious claims and we make no apology for doing so as it keeps premiums down for honest customers.”
One thing is obvious; a judge can tell the difference between a fraudulent claim and a lie. There is a difference between a lie and a collateral lie, which does not influence the overall outcome of an insurance claim. A collateral lie is different to a blatant lie so this isn’t a sort of blank cheque for fraudsters. A judge will determine the outcome.
The conclusion of this may mean that long term, motorists can expect further increases in insurance premiums.