In English law an insured who uses a fraudulent device to promote an otherwise valid claim forfeits the claim.

This is not the position in South African law. Unless there is an appropriately worded fraud clause an insured who embellishes their claim with a lie where it is in all other respects valid will not necessarily forfeit the entire claim. The standard South African fraud clause has been accepted by our courts as appropriate wording to defeat a fraudulent claim and should be used in all policies.

The English courts’ approach is that the rule has a legitimate public policy aim in deterring fraud. The rule does have an in-built proportionality test. It applies to fraudulent devices that directly relate to the claim, that are intended by the insured to promote their prospects of success, and that are, objectively assessed, capable of improving the insured’s prospects of payment or settlement.

The English Court of Appeal authoritively established the English law principal in Versloot Dredging BV vs HDI-Girling & Others, The DC Merwestone.