Failing to accurately respond to insurers' questions when taking out a policy is highly likely to render your cover worthless. A businessman found that out to his cost after losing a £190,000 Rolex watch whilst on a skiing trip.

The man launched proceedings after his insurer refused to pay out for his loss. The insurer required him to provide strict proof of how the loss occurred and argued that it was in any event entitled to avoid the policy. That was on the basis that, when the policy was applied for, there was a failure to disclose a prior £15,000 claim in respect of a diamond which fell out of a ring whilst his then girlfriend was wearing it.

Ruling on the case, the High Court formed a very unfavourable view of the man's credibility as a witness, but was not prepared to find that the claim was fraudulent. The Court accepted that the watch was lost during the skiing trip to Aspen, Colorado, in circumstances that were covered by the policy.

The Court nevertheless found that the failure to disclose the prior claim in respect of the lost diamond amounted to a misrepresentation which entitled the insurer to avoid the policy. Both the man and his executive assistant, who made the representation to a broker on his behalf, knew that the answer provided to the insurer's request for information concerning previous claims was wrong.

On the balance of probabilities, the Court found that, had the previous claim been disclosed as it should have been, the insurer would have declined the policy application. The insurer was thus entitled to refuse the claim but was required to repay the premium paid in respect of the policy.