GJD wrote:What if it happens the other way around - the insured reports a conviction but hadn't previously reported a pending prosecution. Is that bad?
In theory it is a material breach of the duty of disclosure contained in the policy conditions. In practice this senario would be considered as "owning up" so there would be no problem unless a claim had been made since the time at which you became aware of the pending prosecution.
Although I think I've been asked about pending prosecutions at the time of requesting a quote, I don't think it would have occurred to me to report one if it came up mid-way through the policy term.
Most policy has a section that covers the requirement to notify your insurer of material changes ans usually gives a list of examples of the kind of thing covered. Under pressure from the ABI and the government most insurers are trying top make this section ever more prominent, and I you order by telephone you will almost certainly get a verbal warning from the salesperson.
The industries apparent inability to sufficiently educate many of its customers about this stuff is viewed as one of the most serious problems it faces. The ABI has been trying to improve this for years, both by issuing regular warnings in the media and trying to get insurers to improve their documentation, and the financial ombudsman has adopted a zero tolerance approach against insueres who do not make this obligation sufficiently clear.
Partly because I'm not sure I know precisely what constitutes a pending prosecution anyway, but mostly because until the point of being convicted, on the basis of innocent until proven guilty it wouldn't occur to me that it's any of the insurance company's business [*].
A pending prosecution is where you have been informed that it is likely that you will be prosecuted. For most people this will be when you receive a notice of intended prosecution, either verbally by a police officer or by post via a Sect.170 notice.
It is the insurance companies business because when you accepted the policy you agreed as part of a binding contract (the policy terms and conditions) to do so. If you have an accident you quite reasonably expect the insurer to fulfil their part of the agreement to pay out on the claim, in return your insurer expects you to fulfil your parts of the agreement. Such information also has a material impact on the level of risk you present to the insurer and they may need to change their premiums if the perceived level of risk has become too high.
I can easily imagine doing so without having reported the pending prosecution first. Could that get me in trouble?
As I mentioned above if you notified a conviction without previously notifying the pending as long as there had been claim there would probably be no problem (other that a mild lecture from the insurer asking you to take more care in the future)
If you had to make a claim before you got round to reporting the conviction it is a completely different matter though. By failing to comply with your contractual obligations to do so you have committed a material breach of contract. If the breach is discovered, your insurer has the right revoke your policy without any warning or refund (backdated to the time of the breach) and can refuse to pay out on any claim. This can potentially have very serious consequences, for example you may have to foot the bill for third party damages out of your own pocket (which in extreme cases could result in bankruptcy and the loss of your home and other high value assets), and be convicted of driving without a valid insurance policy. Even if you are not to blame for the incident, uninsured drivers can find it much more difficult to recover their losses. It may also result in you (and your household) being recorded in the financial services fraud prevention database as fraud risks which will make insurance (not just car insurance but all types!) and other financial services substantially more expensive for everyone in your household for many years to come.
It does not always come down to that though, ABI guidelines require that such action is not taken if the change would not have a significant impact on the premiums, many people get caught out by minor oversights and are given the benefit of the doubt, but just as many find themselves in the situation I outline above.