A claim for damage to a concrete pump fitted to a truck was denied by an Australian Supreme Court on the grounds of misrepresentation and nondisclosure regarding the pre-insurance unit’s history and a fraudulent claim in which pre-existing damage was denied.

The insured had owned the unit for some time but had not insured it previously.  When taking out insurance its broker’s statement said “no accidents / claims”.  There had been two previous accidents involving the unit through no fault of the insured and the full recovery had been made from third parties in both cases but the damage was substantial.  Attempts by the insured to explain the clear misrepresentation failed.  The court also said that a reasonable person in the insured’s position could be expected to know that these matters were relevant to the insurer’s decision to accept the risk and, if so, on what terms.  The evidence was that the insurer would not have provided cover if it had known the history.

It was also found that there was a fraudulent claim.  There was pre-existing damage to the unit which the insured failed to reveal in answer to direct questions from the claims investigator.  When cross-examined, the insured admitted that they had failed to revel the previous damage to make it more likely the insurer would accept the claim.  The court had no trouble in finding that the claim was fraudulent.  Unlike in South African law, a claim is fraudulent under Australian law even if the lie could not prejudice the insurer even if it were believed or the insurer was not deceived.  That is more punitive than South African law allows.

The insurer was not liable to indemnify the insured in the above circumstances.

Citiline Concrete Pumping (Pty) Ltd v Chubb Insurance Australia Limited (No 2) [2022] NSWSC 1152