The insured, in an Israeli Supreme Court case, claimed under a jewellers block policy alleging he had been a victim of a violent robbery in which diamonds and cash worth approximately $11 million had been stolen. The evidence established that diamonds worth about $6 million of the claim were in the insured’s stock and had been sold by the insured after the alleged robbery.
The insured argued that he was entitled to a partial insurance benefit for the diamonds which the insurers had been unable to definitively prove was in the insured’s possession after the robbery. The insurers had relied on section 25 of the relevant insurance contract law to the effect that when an insured communicates false facts to an insurer the insurer is relieved of all liability.
The Supreme Court found that based on the evidence, no robbery had taken place. In the circumstances ‘where there is no robbery, there is no claim’. The claim was fraudulent in its entirety. There was therefore no need to consider the application of section 25 of the insurance contract law although the Supreme Court said the general principles of good faith would apply to all branches of insurance.
The result would be no different in South African law even where the policy contained no fraud clause.
While at South African common law there is no implied term entitling an insurer to deny an entire claim for fraud which is partly fraudulent, on the relevant facts the entire claim was fraudulent. There had been no robbery as alleged.