Coming Clean

Steve and Sally decided it was time for a sea change. They realised life in the city was full of temptation and it was time to put the “primrose path” behind them.

They found a renovated worker’s cottage in a quaint seaside resort and approached Allsafe Insurance to insure the building and contents.

Steve obtained employment with the local Shire as a landscape gardener, so Sally said she would arrange the insurance. In the course of speaking with Valerie, a recently appointed staff member for Allsafe, Sally was asked a number of questions in relation to her criminal history and that of Steve. Despite being a bit on the wild side, she had avoided the clutches of the law but Steve had not been so fortunate. Unbeknown to her, he had been charged and found guilty of possessing and growing marihuana just under five years previously. He also had a conviction for driving a motor vehicle under the influence of drugs which had been sustained four years previously. Neither matter was disclosed because she did not know about them. The question she was asked was as follows:

“Have you or anyone insured under this policy been charged with or convicted of a criminal offence in the past 5 years?”

She answered “No”.

Two weeks after the commencement of the policy, a drug-crazed vagrant broke into their home when they were having a quiet chardonnay at the local inn and stole most of the contents and damaged the building. Allsafe denied the claim on the basis that Steve had not disclosed his criminal history. The local solicitor informed her that the offences were so minor, there was no obligation to disclose them.

He was half right as the IOS Panel did not believe a drink-driving offence should necessarily be classified as a criminal history; although, there was an obligation to disclose the marihuana-related offences.

Allsafe’s underwriting guidelines provided that a person convicted of a criminal offence within the previous five years was not an acceptable insured. Fortunately, the local solicitor found a loophole because, when the marihuana offences were heard by the court, the magistrate believed Steve deserved some leniency, and whilst he found the charges proven, did not record a conviction against him but placed him on a good behaviour bond for the next two years. Whilst it would not be correct to describe Steve’s behaviour as “good” during that period, it was nevertheless within the realms of the law.

Allsafe was ordered to pay the claim. Others may not be so fortunate. A person who takes out a policy on behalf of another person should be fully briefed as to their background. A failure to disclose even a minor offence, assuming it can be classified as “a criminal offence” can be devastating.