The Nature of the Fraudulent Claim

Any claim presented to an insurer could contain an element of fraud.

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Any claim presented to an insurer could contain an element of fraud. InLekv.Matthews[71] it will be recalled that the insured claimed £44,000 on his policy after the theft of his stamp collection and he maintained an action against the insurer to recover an indemnity for stamps that he had never owned. The misrepresentation would have been made at the time of submitting his list of losses to the insurer. Whilst his conduct and intention could have been willfully fraudulent, the alternative was that he did not care what he disclosed his losses to be and was therefore fraudulently reckless. In some respects the insured’s actions were akin to strict liability. The losses did not occur and therefore it was a misrepresentation. Recently the insurers have to overcome the hurdles of the insured claiming that he made a misrepresentation, but that it was either innocent and negligent and therefore the insurer may either be fully or partially liable.

Notwithstanding this, if the insured made a list of losses that he genuinely believed that he had suffered and subsequently discovered that some of the stamps were not stolen but had been placed in a drawer and forgotten about until they were rediscovered then the fraud would be apparent if the insured willfully continued to maintain the claim. So it is possible that under some circumstances an honest claim can become dishonest, a point that Mance L.J. made inThe Aegeon[72] so the issue becomes one as to what degree of knowledge or willful conduct is required for a fraud to be committed. “The relevant test must be honest belief”[73] and this is more than merely suspicion[74]. Thus, if he had innocently misplaced the stamps and post-theft believed they were stolen, if he was honest, he would inform the insurer and withdraw the claim, unless the loss was covered under the contents policy, in which case the claim should be reformulated and submitted as a loss claim.