Fleet Renewal, an HSE Conviction and Fair Presentation
A commercial motor fleet policy is due for renewal. The insured, a haulage company with 45 vehicles, completes a proposal form that asks: 'Have any directors or partners been convicted of any offence in the last five years?' The managing director was prosecuted in 2023 by the Health and Safety Executive after a forklift injury and fined £18,000; the conviction is unspent. The broker knew about the fine from the client's file but did not disclose it, believing the question referred only to motoring offences. The insurer renews on standard terms. Eight months later, a driver causes a serious collision; the third-party claim is £750,000. During investigation the insurer discovers the HSE conviction and the broker's knowledge. The insurer's underwriter wants to avoid the policy from inception and decline the claim.
1. Explain the insurer's remedies under the Insurance Act 2015, distinguishing deliberate or reckless non-disclosure from inadvertent non-disclosure.
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Under the Insurance Act 2015 the insured must make a fair presentation of the risk, disclosing every material circumstance and not misrepresenting facts. The HSE prosecution and fine are material because they go to management controls and safety culture, which affect both motor fleet and any employers' liability exposure. The broker knew of the fine; because the broker acts for the insured in placing the policy, that knowledge is likely to be attributed to the insured, and the insured cannot rely on the broker's narrow reading of the question. The remedy depends on state of mind. If the non-disclosure was deliberate or reckless, the insurer may avoid the policy, refuse all claims and retain the premium. If it was inadvertent, the insurer must apply a proportionate remedy: avoid and return premium if it would not have written at all; impose the terms it would have imposed; or reduce the claim proportionately if it would have charged more. The insurer cannot simply assert avoidance without evidence.
2. What facts determine whether the non-disclosure was deliberate or reckless, and what would you recommend the insurer do about the claim while the enquiry continues?
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Investigate whether the managing director knew the question covered the HSE conviction and whether the broker deliberately avoided asking. File notes, emails and the proposal form are key. Recklessness can arise where the broker realised the issue might be relevant but did not check; an honest but unreasonable belief is not automatically reckless, but it is not a complete answer either. While the enquiry continues, do not repudiate the third-party claim without checking the Road Traffic Act 1988 position: for compulsory motor third-party liability, the insurer may have to satisfy a judgment and then recover from the insured. Protect the insurer's position by reserving rights, issuing a full reservation-of-rights letter, and considering a declaration. Set a reserve for the third-party claim and for recovery costs.