Opinion
Update on the remedies for fraudulent claims in NZ F
or as long as there are insurance products, there will be fraudulent claims. This seems certain. We revisit the law relating to fraudulent claims and draw attention to one recent development in this area. Historically, there have been three different types of fraudulent claims:
1. Entirely fraudulent claims. There are two types: a) Loss or damage to property is caused by the insured’s deliberate actions, fraudulently portrayed as accidental. b) A fraudulent fabrication 26
June 2021
of the existence of the loss or damage in the first place.
Without becoming too legalistic, the common-law position in New Zealand differs from that in England.
2. Genuine claims that the insured fraudulently exaggerates.
In England, a fraudulent claim is treated as a breach of the rule that a wrongdoer cannot profit from his or her own wrongdoing. It is not treated as a breach of the duty of utmost good faith. This distinction is not academic because this means the remedy of avoiding the policy for a breach of the duty of utmost good faith (e.g., a breach of the duty of disclosure) is not available. In England, the only common-law remedy for the insurer is to be released from the claim payment.
3. Genuine claims that the insured fraudulently bolsters. We address each in turn.
Entirely fraudulent claims a) Common-law
Technically, an insurance policy does not require a term that addresses fraudulent claims. This is because the common-law (caselaw that sets precedents) already prohibits fraudulent claims and provides a remedy for them.
In New Zealand, a fraudulent claim is treated as a breach of the
