Lies, Collateral Lies and Insurance Claims: The Changing Landscape in Insurance Law

Abstract

Determining the scope of the fraudulent claims rule in insurance law has posed a significant challenge for the courts, particularly in the last two decades. In the shadow of the doctrine of utmost good faith, the law in this area has developed in an uncompromising fashion introducing draconian remedies against an assured who submits a fraudulent claim. The Supreme Court's most recent intervention has provided much needed guidance on the state of the law. This article, taking into account the fact that in other areas of law more proportionate remedies have gradually been introduced, discusses the boundaries of the fraudulent claims rule in insurance law as it applies in England and Wales and Scotland. Considering that the insurers might be tempted to introduce fraudulent claims clauses into their contracts to expand the common law definition of insurance fraud at the claims stage, this article also evaluates the wording of such clauses often used in practice and concludes that they lack the desired clarity.