Fraud tarnishes a whole claim

Insurers have won a key battle in the fight against fraud and the dishonest presentation of claims. ...

Insurers have won a key battle in the fight against fraud and the dishonest presentation of claims.

A Court of Appeal judgement in Axa General Insurance v Gottlieb and another held that once fraud has been established in the presentation of part of a claim, the entire claim is tarnished and the insured will be liable to repay any interim payments relating to the claim.

According to law firm Eversheds, although this claim related to household insurance, it will have a "clear application to all classes of business" including personal injury claims where interim payments (for example to fund remedial care) are common.

Both parties appealed the judge's findings, with Axa's defence arguing the judgement may not have gone far enough.

Simon Brooks, partner at Eversheds, commented: "This case is the latest in a recent line of authority clarifying the basis on which insurers can escape liability and recover payments made in respect of fraudulently presented claims."

Prior to the decision in Gottlieb, there was some doubt about the effect of fraudulent claims on genuine claims. In a statement, law firm DLA Piper added: "If genuine claims are settled before a fraud is committed on a separate claim, those claims will remain intact.

"At a practical level it must be borne in mind it is open to insurers to impose contractual conditions that are more rigorous than the common law; and that the decision highlights the importance of trying to identify fraudulent conduct sooner rather than later."

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