Lying on an insurance claim: it's only 'OK' if it's pointless
Have you ever been tempted to lie on an insurance claim? If the answer is yes, you might be in luck


Get the best money-saving tips, tricks and deals sent straight to your inbox every week. Make sense of your money in partnership with The Money Edit.
Thank you for signing up to The Money Edit. You will receive a verification email shortly.
There was a problem. Please refresh the page and try again.
A ruling that ‘collateral lies’ during insurance claims are acceptable could have implications for all household policies, including car insurance and home insurance.
But closer scrutiny of the ruling reveals that it’s unlikely to change much and eager fraudsters can cease gleefully rubbing their palms together now.
A Supreme Court decision has ruled that an insurer should pay out for a cargo ship lost at sea, despite the ship owner’s lie that the crew failed to investigate an alarm due to the vessel rolling in heavy weather. The court termed the untruth a 'collateral lie'.
Had the good ship DC Merwestone headed to the ocean floor due to the failure to check the alarms or the failure of alarms sounding, the insurer might have had greater success in rejecting the claim.
But it didn’t – the vessel was scuppered by ‘perils of the sea’, meaning the owner’s lie was, frankly, neither here nor there.
We hope it goes without saying that fibbing during an insurance claim is a dreadful idea that could have very serious consequences, but if this principal of disregarding ‘collateral lies’ is applied to car, home and travel insurance policies henceforth, how might that actually work? We find out.
(MORE: Insurance assumptions that make an ass out of you and me)
Scenario A: Panic after a prang
You reverse out your driveway and head off to work. Part way there, an errant squirrel kamikazes across the tarmac in front of you.
Unthinkingly, you swerve to avoid the hapless rodent, who escapes unharmed. Your car, and an ill-placed lamppost, aren't so lucky.
As you make the call to your car insurer and peruse your documents, you realise with a sinking feeling you told them you keep the car in the garage every night – not on the drive.
So you tell a porkie on the claim form, with the sorry tale starting out with reversing out the garage – not off the drive.
Scenario B: False alarms
You’ve always enjoyed a discount on your home policy for a professionally fitted burglar alarm.
Coming home from work one day, you smell smoke and hear a telling siren from the end of your road, just as a fire engine passes you at speed.
As you race to your abode you can hear your fire alarm singing, and realise in horror you’ll have to make a home insurance claim… but you’re not sure you set the burglar alarm this morning as you were meant to!
When you phone the insurer you find yourself telling them: “I came home and all the alarms were going off – the fire alarm and the burglar alarm.”
(MORE: Are burglar alarms worth it?)
Scenario C: Traveller's checks
On a trip to Cairo, you decide to take a two-day Saharan safari trip, leaving your laptop, tablet and some cash locked up in your hotel room’s safe.
After 48 hours of sand and scorching rays, you return to find the lock broken to your balcony door and the safe pried open – it’s all gone.
You know your travel insurance covers you as long as your stuff is locked up, but you’re scared the insurer will take a dim view of your excursion.
So you tell a porky, that you were there by the poolside, checking your room frequently.
The common theme
All of these scenarios are linked by more than just lying to the insurer. They all contain an irrelevant lie – or a collateral lie as the Supreme Court terms it.
In short, you’d be likely to be covered anyway in each of these cases – the lie won’t have affected your claim.
Yet lie about something that would affect your claim, such as drink driving, fronting or stating you’ve had more items stolen than you have, and you could end up with anything from a claim rejection to a criminal record.
In fact, in the case of scenario A or B, although the lies were immaterial in these cases, they would have been more important if the car were stolen from the drive or the house burgled – that could, indeed have led to a cancelled policy or the insurer deducting the cost of security discounts from the claim.
“Lying to your insurer – at the outset of your policy or during a claim is always a terrible idea,” said Gocompare.com’s insurance guru Ben Wilson.
“This ruling may protect customers who have blurted out untruths in a moment of blind panic, but only if the lies turn out to be totally irrelevant.
“If they’re not, you could find yourself at the sharp end of fraud accusations.”
So with nothing to gain from lying and plenty to lose, telling the truth about insurance claims is still very much a no-brainer.
Look After My Bills Newsletter
Get the best money-saving tips, tricks and deals sent straight to your inbox every week. Make sense of your money in partnership with The Money Edit.
Derri Dunn specialises in personal finance, insurance and general day-to-day penny-pinching.
-
-
Octopus Energy relaunches energy tracker deal – we explain what you need to know and if it could save you money
If you’re an Octopus Energy customer, you may be able to save on your energy bills with the relaunch of its tracker deal. We look at how it works
By Sue Hayward Published
-
Three energy firms pay £8m in switching compensation - has your provider paid out?
More than 100,000 customers have received compensation after changing providers, but is now a good time to switch energy suppliers?
By Tom Higgins Published
-
Travel insurance: what to look for when buying travel cover this Easter
Buying travel insurance can seem like one more job on your holiday ‘to do’ list, but it’s important you don’t leave home without it. We explain what to look for when shopping around for the best deal
By Sue Hayward Published
-
Missed flight cover: when can you claim if you miss your plane?
Bad weather, traffic jams, breaking down or not having a valid passport could all mean you can’t get as far as the airport – we look at whether your travel insurance will pay up
By Sue Hayward Published
-
Six reasons your home insurance could be refused, cancelled or voided
Check your policy and read the small print to ensure your home insurance is not refused, cancelled or voided
By Sue Hayward Last updated
-
Average price paid for home insurance ‘at lowest levels in at least a decade’
The average cost of home insurance in 2022 was £300 - how does your premium compare?
By Katie Binns Published
-
Revealed: the job titles that add £100s to car insurance - and the cheaper alternatives
Job titles that will see the biggest rise in car insurance costs in 2023 have been revealed - is your job title one of them? And how to find cheaper alternatives
By Vaishali Varu Published
-
How to avoid sneaky car insurance fees
Some motor insurers are increasing fees and charges for motorists. We reveal how to avoid them
By Sue Hayward Last updated
-
How to get cheap car insurance: 10 ways to cut the cost
If you’re a driver, you can’t hide from paying for car insurance but knowing how to get cheap car insurance can cut the cost without compromising cover quality.
By Vaishali Varu Published
-
Amazon sells insurance: is comparing and buying an insurance policy through Amazon any good?
Amazon Insurance Store launches in the UK to sell home insurance
By Sue Hayward Published