Fraud in insurance & fraud on insurers: a distinction without a difference, ask Alison Padfield & Sam Nicholls
Why should a claimant forfeit the whole of a fraudulently exaggerated claim made directly against an insurer under an insurance policy, but only forfeit the fraudulently exaggerated part of a civil claim in which the defendant is insured, with the damages to be paid (indirectly) by an insurer? This is the puzzle which remains after the Supreme Court’s decision in Fairclough Homes Limited v Summers [2012] UKSC 26.
The question of how to deal with a fraudulently exaggerated civil claim has a short—barely a decade—but interesting history (see Dominic Regan’s article “Damaged!”). In the law of insurance, on the other hand, the modern approach was established by Willes J in Britton v Royal Insurance Co (1866) 4 F & F 905. As Willes J explained, in a claim for goods consumed by fire: “It would be most dangerous to permit parties to practise such frauds, and then, notwithstanding their falsehood and fraud, to recover the real value of the goods consumed.”
A
