Not declaring penalty points- what is the risk?

dinneenp

Hi,

Got car insurance renewal letter. Noticed that it has my wife, named driver, with 0 penalty points. She has 6 and I clearly said this last year.

While I will phone them to rectify it what would be the repercussion if I didn't & one of us was involved in an incident/claim? Can they refuse to pay/cover you?


btw I know that insurance companies have access to penalty points database so they can check the info if they want.
Thanks,
Pa

baldbear

I'm no legal expert Pa. but I'd say they will screw you if there ever was an accident.

Does the letter state if any changes occurred to notify them? Because if it does and you don't disclose the penalty points their could be trouble ahead if their was an accident.

Sue Pa Key Pa

baldbear wrote: »

I'm no legal expert Pa. but I'd say they will screw you if there ever was an accident.

.

If you don't declare points when required, you'll have screwed yourself

NUTLEY BOY

Insurers could probably argue, with confidence, that if the policyholder allows renewal to proceed without notification of the penalty points that would constitute non-disclosure of a material fact.

The duty of disclosure arises when you first apply for insurance. However, that duty of disclosure also revives every year [in the case of an annual policy] at renewal.

The apparent unawareness of insurers in relation to the penalty points accrued provides no justification for non-disclosure.

Non-disclosure would have the effect of rendering the policy void - or voidable at the option of the insurers - once the renewal date had passed. That would mean that any claim arising after renewal could be avoided on the basis that the policy was void due to non-disclosure.

Voiding of a policy due to non-disclosure (or repudiation of a claim) then becomes a material fact in itself which has to be declared to any future insurers.

It would also constitute the offence of fraud under the RTA 1961 (S.64). Link http://www.irishstatutebook.ie/eli/1961/act/24/section/64/enacted/en/html#sec64

223vmax

I think I read some time ago that even if you don't disclose certain information your insurer is legally required to pay up for 3rd party liability regardless. Would it be similar to drink driving or breaking other motoring laws and the insurance saying "well you were speeding so we're not paying out"?

In any case, regardless of legalities, your insurer should be in their rights to refuse to pay out when you don't declare something you know you should have. That's no defence - its fraud!

seamus

There's a principle in insurance called "utmost good faith" which is asserts that the contract is underpinned by the understanding that both the insurer and insured are completely upfront and honest about all matters in regards to the policy.

This is the exact opposite of "caveat emptor", which places the obligation on the party to discover issues before the contract and instead makes it an obligation on both parties to declare all relevant information to the other. Failure to do so can render the contract invalid.

Motor insurance has a kicker in that the contract can be declared invalid, but the insurer still has a legal obligation to cover 3rd party claims made on the policy.

So if you were to not declare points and get in an accident, the insurer may still have to pay a 3rd party claim, but may also cancel your insurance and decline future cover - all things which you would be obliged to declare to a new insurer, who will charge you through the nose for insurance.

In the earlier days of penalty points, insurers were a bit softer. Because there was often confusion about how, when or if points had applied, non-disclosure of points simply meant that your excess became €1,500 or so. Because it would be hard to prove that a driver knew about points and didn't disclose them.

However I'm not sure if they've tightened up on it now.

NUTLEY BOY

The observations about some third party claims having to be paid are correct.

However, be aware that this is not the same as the insurer providing indemnity under the policy. This would be the insurer paying under other legal obligations. In that scenario the policyholder is open to the insurer seeking reimbursement of any outlays incurred solely by virtue of statutory obligations.

Sue Pa Key Pa

While the duty of disclosure revives at renewal, some insurers have policy conditions which require you to disclose points when they are applied.

Skedaddle

Well, considering you would be failing to disclose information they specifically asked for you would be in breach of contract and possibly could even be committing a form of fraud as you’re not disclosing information specifically so you can deceive them and get a better rate than you are entitled to based on your real risk weighting.

Also it would be very naive to assume that can’t now or at some stage in the future check the RSA database..

Sue Pa Key Pa

Bottom line, based on my extensive experience in the business. Never give an insurer the chance to strictly apply the terms and conditions of the policy. They will take it. If in doubt, declare it