The disclosure of prior insolvencies
The Insured ran a clothing shop which suffered serious water damage as a result of a faulty water heater. The company had two directors, one of whom was previously involved in an unconnected business which had gone into liquidation some years earlier.
When the insurer discovered the details of this prior liquidation, the claim was refused and the policy voided from inception. The insurer was able to show, from its underwriting criteria, that had it known about the liquidation, it would not have accepted the proposal for insurance.
However, in this case, the insurer had employed a statement of Fact which included the following statement:
Neither You or Your directors or partners involved with The Business or any other company or business have: