Fraudulent claims

Effect of a fraudulent claim

As a result of the numerous decisions on fraudulent claims in the last few years, and in particular Agapitos v Agnew [2003] QB 556, it has become apparent that the making of a fraudulent claim is not a breach of the assured’s duty of utmost good faith, so that there is no question of insurers avoiding the policy ab initio. Instead, the insurers’ remedies are contractual. What is uncertain is whether the insurers’ remedy is to refuse to pay the claim or whether there is a further entitlement to terminate the entire policy for breach. In AXA General Insurance Ltd v Gottlieb [2005] EWCA Civ 112 the Court of Appeal has confirmed that the making of a fraudulent claim does not affect the assured’s accrued rights under the policy but has once again shied away from indicating the effect on the future of the policy itself. The leading judgment in Gottlieb was delivered by Mance LJ, who had also delivered the leading judgment in Agapitos.