CMFAS BCP Claims question: genuine fire loss of S$10,000 but deliberately inflates the claim to S$18,000

CMFAS BCPClaims

An insured suffers a genuine fire loss of S$10,000 but deliberately inflates the claim to S$18,000. What is the likely consequence?

A The insurer pays the genuine S$10,000 and simply ignores the exaggerated S$8,000
B The insurer pays S$18,000 to avoid a dispute
C The insurer may repudiate the entire claim, including the genuine portion
D The insurer must pay half of the claimed amount

Show the answer and explanation

Answer: C. The insurer may repudiate the entire claim, including the genuine portion

A fraudulently exaggerated claim taints the whole claim. Because insurance requires utmost good faith, the insurer may repudiate the entire claim (not just the exaggerated part), may avoid the policy, and the insured could face prosecution.

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CMFAS BCP Claims question: genuine fire loss of S$10,000 but deliberately inflates the claim to S$18,000

Answer: C. The insurer may repudiate the entire claim, including the genuine portion

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CMFAS BCP Claims question: genuine fire loss of S$10,000 but deliberately inflates the claim to S$18,000

Answer: C. The insurer may repudiate the entire claim, including the genuine portion

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