How can an IVA affect our insurance premiums ?

[TigerTiger]

Lem , in other words your insurer varied the terms in the light of the IVA. Other insurers might well vary them in different ways or not at all. Each will give different weight to different risk factors depending on the type of business they want to write.

[CoverItAll]

Every insurance policy in the UK is a legal contract between the Policyholder and the Insurer. The insurance contract is based on “utmost good faith” – the Insurer is legally obliged to disclose to you everything about the policy, and equally you are legally obliged to disclose to the Insurer any fact that is “material” to the contract. Unfortunately the insurance industry has for years refused to define “material”, and simply says that if you are unsure whether a fact is material or not, then to be safe you should disclose it.

What is not in doubt is that being in an IVA is a material fact – as is still the fact that I was bankrupt from October 1995 to October 1998.

Not disclosing a material fact does not mean your claim will not be paid, but it does mean you will never know whether a claim will be paid until you submit it. You are left with the worry that if the Insurer finds out, you have given them an easy way to avoid the claim, to cancel the policy, and to keep the premium ! You are simply gambling that they won’t find out.

There is a way to be absolutely safe - TELL THE INSURER. If then they won’t cover you, that’s the proof that they wouldn’t have paid the claim anyway - and you’ve established this without losing your premium and ending up uninsured.

The very worst scenario is for this to happen to your car insurance, because if your motor insurance policy is cancelled by the Insurer, not only are you left with a potentially huge bill, YOU ARE ALSO IN TROUBLE WITH THE POLICE, because driving whilst uninsured is an offence.

Although it is now 17 years since my discharge, every time I complete an insurance contract I DECLARE MY BANKRUPTCY TO THEM IN WRITING, and insist that they confirm back to me that this does not impact on my policy in any way.

Why do I go to all this trouble ? Because I have worked in the insurance industry for 46 years, and I know what it can be like.

Do yourself a huge favour, don’t gamble on the Insurer not finding out about your IVA, make sure your insurance protection PROTECTS YOU, not the Insurer. It took my firm five years to persuade an Insurer to allow us to endorse our Insurance Certificates with “The Insured has disclosed to us that they are currently in an IVA, and we confirm that this does not impact on this policy in any way, it does not increase the premium, it does not change our Underwriting decision, and it certainly does not impact in any way on our claims settlement”.

If your Insurer won’t give you this confirmation, WALK AWAY, and find another that will.

[Adam Davies]

Hi

Some wise words from Mr Tegg

Regards

[TigerTiger]

Thankyou for coming to the rescue with your expert post. It thankfully endorses what I've tried to get across to some of those posting misleading information and advice and will hopefully limit any damage done.

[Jayne.01]

We are still waiting to hear back from our insurers but will keep the forum posted. I am now panicking though, as I have not informed any of our insurers that we are in an IVA. This only arose because we actually had a claim and they asked, we have not been asked on our new car insurance or pet insurance. Does this mean that on a critical illness policy that we have paid for 15 years, they can just cancel because we are in an IVA?

[Skippy]

I have to say I haven't declared that I was BR (unless asked) since I was discharged. I've read the small print for my insurance and there was no mention of insolvency. I also made a claim on my car insurance and it was settled without any problems.

Regarding the material facts issue, how are we supposed to know what it material or not? Surely the insurance companies need to be more transparent about what information they need?

[CoverItAll]

Hi TigerTiger
I stopped posting on here for a long while because my posts on the legal position were drowned out by the "but we've got away with it for years" brigade. it's just the same as breaking the speed limit - getting away with it yesterday doesn't mean you can get away with it today.

Hi Skippy
I agree that Insurers need to define "material" but they don't at present, and until, they do, it's always safest to check.


What is good news, and well overdue, is that the interpretation of "material" is more often than not "If this information had been available would it have changed anything ?". If however the Insurer says "Yes, if we had known about the IVA or the Bankruptcy we would have refused cover" you have a problem.

Ask your Insurer this question IN WRITING "Does my being in an IVA affect my insurance ?". If they say no, you have the relief of knowing you have real cover. If they say yes and cancel your cover, then on the basis that they have not been providing cover you can ask for your premium to be returned.

Finally, please report back on here the Insurance Company's name, the type of insurance (House, Motor, etc), what stage of Bankruptcy or IVA you are in, and their reaction. Forum Admin can then archive this information and share it with Forum members seeking cover.

Here is my contribution:
Ecclesiastical Insurance cancelled cover on a combined Home & Office policy 4 years after my discharge from Bankruptcy.

[admin]

Many thanks CoverItAll for this valuable information and we will certainly act on your suggestion.

[CoverItAll]

Hi TigerTiger
I stopped posting on this subject some time ago when my statements of fact were drowned out by the “it's never happened to me” brigade. This is rather like someone saying I broke the speed limit yesterday and got away with it - it certainly doesn't mean that the same will happen tomorrow.

Hi Skippy
I agree it is high time the insurance industry defined “material fact” but we have to live with the fact that they haven’t. It should mean a fact that if disclosed would make a significant difference to the underwriting decision, and the rating and hence the premium. The problem is that because it often means policy refusal, people tried to avoid this. They don't realise that having a piece of people called an insurance policy that doesn't pay out is much worse than not having a piece of paper at all.

My fear is that there are hundreds of insurance policies in existence than would have been refused by the insurer if this disclosure had been made on the application. The only safe way to find out whether you have real insurance that would pay out is to disclose to the Insurer that you are/were bankrupt/in an IVA. For safety's sake, you should do this in writing, and especially if it’s car insurance DO IT NOW, not when faced with a huge personal injury claim, and then also being convicted of driving without insurance. .

If the Insurer comes back and says no problem -you have a sound insurance policy. If they say that they are cancelling your insurance, then you know that they would not have paid out on that policy anyway, and you can now ask them for a refund of premiums on the basis that they have not been carrying the risk. The refund will enable you to insure elsewhere. If all Forum Members were to do this for all of their insurance policies, we could then feedback the results on here. Perhaps Forum Admin could build an archive of Insurers that will help, and those that won't. If Admin aren’t keen to do this, I will volunteer to hold the information and make it available to Forum Members by putting it on a regularly updated web page. We need to feedback type of policy (home, motor, etc), BR/IVA, start date of BR/IVA, and Insurer’s reaction.

Let me start with my own experience:
Ecclesiastical Insurance
Combined Home/Office policy
Bankrupt from October 1995-1998
Cancelled cover four years after date of discharge

We really have a good chance here to help ourselves and other Forum MemberS, If we get on and do this collectively.

What do other Forum Members think ?

[Daniel Griffiths]

Hi John

I think that your posting is one of the most informative postings I have ever read on this forum, thank you

[TheMatrix]

font size="1" face="Verdana, Arial, Helvetica">quote:<hr height="1" noshade>Originally posted by Skippy


Regarding the material facts issue, how are we supposed to know what it material or not? Surely the insurance companies need to be more transparent about what information they need?

I'd have to agree with this. I had toast for breakfast, do they need to know that too? You'll end up second guessing what is relevant and what is not.

[Niobe]

I also agree with Skippy and TheMatrix - it isn't down to us to try and think what is relevant and what isn't.

[Shining]

I've never mentioned it to any of mine but having said that not been asked either... this post is making me wonder. Hopefully I'll be out of the IVA next year but wonder if it will have any impact on future insurance decisions of mine.

[TigerTiger]

Harpic and Matrix. Like it or not 'material disclosure' is an important element in most insurances as it goes to the heart of whether or not you are contracting with the insurer in good faith. In the event of a claim where the insurer relies on non-disclosure to deny the claim , it can be appealed. Much better to be properly insured in the first place.'cover it all'is an expert in that area and has been kind enough to spoon feed you with some examples and explain the issue. If you still don't understand, post a question. Asserting the opposite as a fact, however, is just plain misleading to those who might have missed Cover it all's post or what I said on it earlier and that undermines the credibility of the forum.You say Harpic 'it isn't down to us to try and think what is relevant and what isn't' - yes it is.

[TheMatrix]

I agree about disclosure, but my point was that of relevant disclosure.

Personally, I gave the example of eating toast being irrelevant, I considered up until I read this post that same irrelevance applied to a completed IVA.

I fail so see any relevance that a completed IVA discharged BR would need to disclose the fact they completed a IVA/BR X number of years ago. It's history, does not relate to anything to do with the insurance in my opinion so why would it need to be disclosed more than what I had for breakfast.