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Insurance case update - fraud: Ltd vs Allianz Insurance Ltd [2014] EWHC 3676 (QB)

By: | Published on: Dec 29, 2014


On the night of 26/27 February 2011, a fire broke out at the premises of the insured, Ltd (the “Insured”). It was agreed that the cause of the fire was arson and that the fire had quickly accelerated as a result of the presence of diesel.


The Insured attempted to claim under the insurance policy but the insurer, Allianz Insurance Ltd (the “Insurer”), suspected that the fire was caused by the Insured. If the Insurer’s suspicions could be proven, the Insurer would be entitled to avoid the insurance policy on the grounds of fraud. The matter proceeded to the London Mercantile Court and was tried by Judge Mackie QC.


Standard of the burden of proof

The burden to prove that the Insured had been involved in the arson lay with the Insurer. It was agreed that the test for the burden of proof needed to be, on the balance of probabilities, “commensurate with the gravity of the charge”.[1] This means that the probability of an event occurring must be taken into consideration and therefore, where an event is considered less likely to have occurred, stronger evidence must be adduced.[2] The possibility of a substantiated alternative occurrence of events is also an important consideration where probable and this can prevent the burden of proof from being discharged.


Evidencing motive is considered persuasive but not conclusive proof.[3] In addition, the evidence to show motive does not need to be complete. The courts will consider the circumstantial evidence and ambiguities or gaps within the evidence are permissible.[4] It is also worth noting that an insured’s prior reputation and respectability does not save the insured if there is enough evidence to show motive.[5]



The Insured had installed external CCTV cameras showing a male arsonist. The footage showed the man pushing a hose under the premises shutters. He then entered the premises with a set of keys and spray painted the CCTV cameras prior to the fire being started.


The Insured tried to argue that the fire came about as a result of a former unhappy female employee who refused to return a set of keys and was litigating for unfair dismissal. However, the court held that the CCTV footage seemed more like a weak attempt to frame the former employee as opposed to real evidence against her.


Diesel was discovered on boxes and shelves within the premises and, with expert evidence, the court concluded that it was very likely the diesel had been spread out before the fire started by the two owners of the Insured since the records showed that they were the only two people who had gained entry to the premises that night.



On the balance of probabilities, the court found that the Insurer’s claims were proven.[6] Judge Mackie QC therefore held that the Insurer was permitted to avoid the insurance policy on the basis of fraud.


This recent case reaffirms the established principles in insurance law and, in particular, the standard of proof required to establish fraud on the balance of probabilities.

[1] National Justice Compania Naviera SA v Prudential Assurance Co Ltd (The Ikarian Reefer) (No.1) [1995] 1 Lloyd’s Rep 455

[2] Patel v Windsor Life Assurance Co Ltd [2008] EWHC 76 (Comm)

[3] National Justice Compania Naviera SA v Prudential Assurance Co Ltd (The Ikarian Reefer) (No.1) [1995] 1 Lloyd’s Rep 455

[4] The Captain Panagos DP [1989] 1 Lloyd’s Rep 33, CA

[5] The Zinovia [1984] 2 Lloyd’s Rep 264

[6] The Popi M [1985] I WLR 948

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