Proportionate Remedies For Misrepresentation

• Published date: 18 May 2022
• Subject Matter: Consumer Protection, Insurance, Litigation, Mediation & Arbitration, Consumer Law, Insurance Laws and Products, Trials & Appeals & Compensation
• Law Firm: Dillon Eustace
• Author: Mr Peter Bredin and Rachel Turner

In Tolan v McLaughlin & Greaney Insurances Limited T/A Future & Zurich Insurance PLC, [2022] IECA 27, the Court of Appeal upheld the decision of the High Court dismissing the plaintiff's claim against, Future, his insurance brokers, and Zurich Insurance plc ("Zurich"), his insurers, arising from Zurich's decision to withdraw storm cover retrospectively due to a misrepresentation in the proposal form.

Background

The plaintiff, Mr Tolan, held an insurance policy with Zurich in relation to his farm and buildings. The policy had been placed through Future. In February 2017, Storm Doris damaged the plaintiff's two cattle sheds, which had been insured with Zurich since April 2015. Following notification of a claim to Zurich in relation to storm damage to the sheds, Zurich declined to indemnify the plaintiff. Zurich did not repudiate the policy, instead, Zurich withdrew the storm cover retrospectively from policy inception in relation to the cattle sheds and refunded that part of the premium which related to the insured value of the cattle sheds. Zurich otherwise continued to provide cover to the plaintiff.

The reason for withdrawing the storm cover was that the description of the cattle sheds in the submission for insurance to Zurich was incorrect. The submission reflected that the cattle sheds had been built in 2007 and that the walls of the sheds were constructed of concrete block. The cattle sheds were in fact older and the walls were constructed of stone.

The High Court judgment

The primary issue of fact in the High Court was the source of the information given to Zurich to quote for the insurance cover for the cattle sheds.

The plaintiff claimed that Future's employee should have notified Zurich that the buildings had been constructed in the 19^th century and that Future compounded the errors made in the completion of a previous proposal form sent to his prior insurers, which referred to '2002', as being the year of building for the cattle sheds.

Future maintained that the plaintiff told it in 2015 that the cattle sheds were built in 2007 and that any losses suffered by him were therefore as a result of his own actions. They also outlined that if the plaintiff had provided the correct information, he would not have been able to obtain storm cover in respect of the cattle sheds in any event due to their age.

The court noted that Zurich handled the claim in a way which reflected what they would have done at policy inception, if the correct material facts had...