It is common knowledge that the law requires an insured to be completely truthful when seeking to claim under an insurance policy. In the recent High Court decision of Polladio Holdings Limited v The New India Assurance Company Limited [2023] NZHC 1147, the court reinforced the strictness of this obligation.
On 20 November 2019, a hailstorm occurred in the vicinity of the insured’s commercial premises. The insured signed a claim form seeking cover for alleged hail damage to the roof of its commercial premises. The insurer received the claim form on 11 September 2020, some 10 months after the hailstorm.
Statements in support of the claim
Under cross-examination, the insured was shown a letter he sent to his insurance broker on 16 July 2020 saying he didn’t know about the hail damage until his builder discovered it a few weeks before the date of the letter. He confirmed this was correct.
However, under cross-examination, the builder confirmed he had been contracted by the insured to check the roof and stop leaks initially on 25 November 2019, some days after the hailstorm. The implication of this was that the insured knew about the alleged hail damage then and not later in mid-2020 as he stated.
In light of this, the insured was recalled to give further evidence. The court found the further evidence not particularly helpful. The insured ultimately accepted that the statement made to the insurance broker on 16 July 2020 that was relayed to the insurer was untrue.
The policy contained the usual strict obligations to be truthful. These included:
8 GENERAL CONDITIONS
8.1 Comply with the policy
You must meet the following conditions BEFORE we are obliged to pay you:
8.1.1 You must comply with all the policy terms, and
8.1.2 Provide true statements and answers when you:
....
• make any claim under this policy.
Dishonest or fraudulent claims
If your claim is dishonest or fraudulent in any way, we may decline your claim, wholly or partially and, at our discretion, declare that this policy is unenforceable from the date of the dishonest or fraudulent act.
The court relied on these terms to find that the insurer was entitled to decline the claim because of the insured’s untruthfulness.
Exclusion for ‘marring’
On the facts, the court also upheld an exclusion in the policy that excluded cover for any marring damage. The word ‘marring’ was not defined in the policy, so the court applied its dictionary meaning which is:
....detract from or impair the perfection of, disfigure.
Based on the expert evidence, the court accepted that much of the roof had suffered minor indentations only that did not detrimentally affect the roof’s utility or longevity. The court found as follows:
[39] Marring refers to blemishes that detract from the perfection of the item insured. It conveys the idea of superficial damage affecting the appearance of an item, which impairs aesthetics rather than functionality. In my view, the marring exclusion contained in the policy applies to the indentation damage to the roof from the hail storm.
As far as we are aware, this is the first decision by a court in a common-law country on the application of this exclusion.
Keegan Alexander acted for the insurer in this case.
Please feel free to contact us if you require any further information.
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Crossley Gates | cgates@keegan.co.nz
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Frank Rose | frose@keegan.co.nz
