Sceptical insurer punished for ‘inexcusable delay’
The Court of Appeal has ruled against an insurer who delayed a case in the expectation it could prove the claim was fraudulent.
UK Insurance Limited had successfully applied to have a £75,000 damages claim set aside, saying an allegation of fraud needed to be investigated.
Lord Justice Vos (pictured), sitting in the appeal court, heard the insurer was convinced the victim of an RTA, who claimed for the value of his car and the cost of hire replacements, knew the insured driver prior to the accident.
The damages award was made in October 2013 after the claimant’s lawyers, from Armstrongs Solicitors, had sent the insurer five unanswered letters in the space of two months asking for compensation to replace the damaged vehicle and warning about the growing hire charges.
Liability had been admitted in April 2013 and proceedings were issued in June 2013 when no response was forthcoming from the insurer.
When the defendant firm Keoghs applied to set the award aside, District Judge Henthorn agreed in the interests of justice.
In the appeal hearing last month, the claimants argued the judge had been wrong in law to hold that the fraud defence provided an exemption to the principles extracted from Mitchell and Denton, cases which decided how best to treat non-compliance. The insurer contended it had a ‘reasonable excuse’ for delaying proceedings because of suspicions about fraud.
Vos said the insurer had ‘delayed inexcusably’ and made no attempt to justify its conduct.
In Gentry v Miller & Anor, the judge said: ‘The court cannot ignore that insurers are professional litigants, who can properly be held responsible for any blatant disregard of their own commercial interests.
‘This insurer had known since April 2013 that it was at risk of proceedings being commenced and being served on its insured, yet it did nothing to ensure its position was protected.’
Vos explained allegations of fraud may in some cases excuse an insurer from taking steps to protect itself, but in this case the insurer missed ‘every opportunity’ to take these steps.
He ruled that the application to set aside the default judgment ought to have been refused.