Property insurance—fraudulent claim—alternative accommodation costs—insurer’s entitlement to recover all sums paid

Aviva sought recovery of all sums paid to its insured on the basis that part of the claim had been fraudulent. The claim had arisen on subsidence damage and necessary repair work to the insured’s residential property. The total cost of repair was in the region of £180,000, to which the insured added a claim for alternative accommodation costs of some £58,000. The insurer contended that this latter sum was fraudulent in that the insured had falsely represented that the alternative accommodation was owned by a third party and that the proposed letting would be at arm’s length when in reality the insured owned the property; the insured was thus not liable for any rental payments. The insurer relied on common law principles and in addition an express condition in the policy of insurance to the effect that it “will not pay any claim which is in any respect fraudulent”. The specific allegations of fraud were that the insured had falsely represented that two alternative properties available for lease (No 38 Lyonsdown Avenue, and No 15 Friern Barnet Lane) were owned by third parties when in fact the insured was the owner of both.