Legal clarification from the Norwegian Supreme Court regarding the significance of incorrect information provided during the insurance settlement



On 31 May 2024, the Norwegian Supreme Court ruled in a case regarding the insurance settlement of a company who had a fire in their production facilities (HR-2024-989-A). The subject matter of the case was whether the insured should have their insurance claim rejected because they knew or must have known that providing incorrect information during the claim settlement could lead to more compensation than they were entitled to. The Supreme Court ruled in favour of the insurance company, overturning the Court of Appeals' decision in favour of the insured. 

When an insurance claim is covered by insurance, the insurance company may reject to cover the damage if the insured knowingly provides incorrect or incomplete information during the claim settlement, as long as the insured knows or must know that the information provided may result in receiving compensation they are not entitled to, cf. the Norwegian Insurance Contracts Act Section 8-1. 

In this case, the Court of Appeals found that the incorrect information was provided by the insured's general manager, who knowingly stated that several of the company's inventories damaged by the fire were newer than what they were. The crucial question was not whether the general manager had knowingly provided false information, but whether the general manager knew or must have known that this act could lead to a higher compensation than the company was entitled to. 

The Court of Appeals held that that the general manager likely did not know or must not have known that the compensation would be higher than what the insured were entitled to as a result of the incorrect information and ruled in favour of the insured. However, the reasoning contained elements of negligence. The Supreme Court found that the Court of Appeals had not applied a correct norm. 

The Supreme Court's view was that the "more likely than not" requirement does not apply to the question of whether the insured knew or must have known that the incorrect information would lead to a higher compensation, but only to the question of whether the insured actually provided incorrect information during the settlement. 

The Supreme Court stated that the production of incorrect information, in response to a specific request for that information from an insurance company, was sufficient to evidence that the insured must have known that it could lead to higher compensation. The Supreme Court's reasoning is that when the insurance company requests information about factual circumstances, the insured understands that this information may be significant in the insurance company's assessment of the compensation. 

The case may have significant implications for future insurance settlements, as it is now evident that providing incorrect or incomplete information that was requested by the insurance company may result in a rejection of the claim pursuant to Norwegian law. This could however have negative consequences for the insurance company if the insured gives incorrect or incomplete information on something that the insurance company did not request, but which could still affect the determination of the compensation. In such cases, the insurance company might be left with the short end of the stick. 

Schjødt's insurance team, with Arild Dyngeland from the dispute resolution department in the lead, litigated the case in the Court of Appeals and in the Supreme Court. 

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