By Andrew Milne, Sedgwick London
The Court of Appeal in England and Wales recently affirmed the High Court’s decision in Alan Bate v Aviva Insurance UK Ltd  EWCA Civ 334, which held that Aviva was entitled to rescind or avoid a domestic property insurance policy taken out by Alan Bate.
Mr. Bate took out a policy covering a substantial property he owned called the Long House, which he was converting into five separate dwellings. The Long House was damaged in a 2001 fire, and a claim was made with Mr. Bate’s previous insurers. At the time Mr. Bate sought coverage from Aviva, he represented in his application that the 2001 fire had occurred at a “previous address,” and failed to disclose the renovation being done to his property and that the company performing the work was based at the property.
In June 2006, the Long House was largely destroyed by a second, accidental fire following which Mr. Bate submitted a claim to Aviva. Aviva did not accept the claim, and informed Mr. Bate it had decided to rescind and/or avoid the policy on the grounds of misrepresentation and non-disclosure. Mr. Bate commenced proceedings against Aviva, and the High Court ruled in Aviva’s favor.
The judgment is interesting because it concerns a claim that arose before the Consumer Insurance (Disclosure and Representations) Act 2012 came into force. The Act replaced a consumer’s duty to voluntarily disclose material facts with a duty to take reasonable care not to make a misrepresentation during pre-contractual negotiations. Although a similar decision probably would have been reached in this case even if the Act had been in effect when Mr. Bate filed his claim with Aviva given the misrepresentation he made about the 2001 fire, it is unlikely to be long before we see reported cases where insurers are prevented from rescinding or avoiding consumer insurance policies in circumstances where they would have been able to do so before the Act took effect.