'Our 16-month battle to prove we're not insurance fraudsters after we spilled nail polish on the carpet'

In 2020, insurers detected 24,000 fraudulent property claims worth £111m, according to the Association of British Insurers. But ‘detection’ isn’t always proof. 

In February, a Which? member Francis Moss (pictured above) – accused of insurance fraud in 2020 – won a gruelling 16-month battle against this heavily damaging allegation. 

Find out how he fought back and won his case plus what to do if you're accused of insurance fraud.

Spilt nail polish and the 'possibility of fraud'

Francis and his wife claimed with home insurer RSA in late 2020 after spilling nail polish on their bedroom carpet. 

However, in November, the insurer determined that their claim was fraudulent. It argued there were ‘inconsistencies’ in how Francis’s wife had described the event when interviewed. 

Specifically, she had initially said she’d ‘dropped’ the polish, and later explained she’d ‘knocked’ it off a table. Additionally, RSA believed that photos they examined of the spill indicated the polish had been poured - rather than knocked - onto the carpet. A forensic expert reviewed the images, and agreed that RSA's theory was 'more likely'. However, no-one actually visited the Mosses' home to inspect the stain more closely.

The couple were billed £570 for the forensics investigation - but weren’t actually allowed to read the report. After Which? Money contacted RSA last January, it allowed them to see the report, and waived £350 of the bill.

The couple vigorously disputed RSA’s theory - critical of its heavy-handedness and how much of its conclusion derived from an expert's opinion of photos of the spill, whose report wasn't initially shared - nor their credentials or experience, stated. Francis felt that the insurer ‘didn’t need to establish fraud at all – just the possibility of it’ to conclude that he and his wife had been dishonest. 

RSA declined the claim, cancelled their cover, and placed Francis’ wife on an industry fraud database, greatly restricting the family's ongoing access to insurance. 

• Find out more: how to make an insurance claim

Complaint to the Financial Ombudsman Service

Francis complained to the Financial Ombudsman Service (FOS) and felt optimistic when - last September - an investigator contacted him with an initial view. 

The investigator felt that RSA's conclusions were 'based on uncertainties', and that the forensic report didn't explain in detail how the carpet stain was 'wholly inconsistent' with the Moss family's version of events - which he believed to be 'plausible' and 'consistent'. He wrote that he could understand why the insurer had asked questions - but didn't believe it had demonstrated fraud. 

RSA requested a second opinion. An Ombudsman at the FOS reviewed the case and this time sided with the insurer. He believed the matter hinged on expert evidence – and the only available example of this was RSA’s forensic report. This meant the only avenue the Moss family had to counteract it was to commission their own report. 

What the second forensic report found

Disheartened, but not deterred, the couple paid £480 for another forensics expert to examine photos of the original stain and also several videos they’d made since, reconstructing the accident – and causing similar spills. This expert took their side, and in his report was also critical that the initial forensic analyst hadn't mentioned the possibility of the polish bottle causing the spill patterns seen if it had been sent into a spin when knocked from the bedside table.

In light of the new evidence - which the RSA declined to challenge - the Ombudsman revised his view. The FOS has now ordered the insurer to pay the claim, reimburse the couple’s costs, remove records of fraud, and pay compensation - including the higher premiums they've had to pay for insurance since their policy was cancelled.

Limited help for accused customers 

Although a hard-fought success for the couple, we think this case highlights concerning issues about what real recourse policyholders have when accused of fraud. Potentially already on the hook for the insurer’s costs in validating its suspicions with the initial forensic report, the only credible means of fighting your corner is to then fork out more for expert opinions – something not everyone can afford to do.

But the consequences are severe. Last April, comparison site Confused.com told us that customers who declare when applying for insurance that a previous policy has been declined, cancelled or had special terms imposed will pay 80%-90% more, on average, than other customers. And fewer insurers will be prepared to offer them quotes at all.

Unlike claims, the effect persists indefinitely. You can stop declaring most claims after five years - but insurers can ask if you've ever had a policy voided or cancelled. 

RSA's response to the case

We put to the RSA that in this case, the process seemed weighted against the customer, and that it also raises questions about how fair the consequences are of being accused of attempting fraud where it hasn't been proven. 

An RSA spokesperson said: 'We always strive to pay claims as quickly as possible, having paid out over £2bn in 2021. While the vast majority of claims are from honest customers, unfortunately, a small proportion are fraudulent.

'It's important that we try and identify these, but we apologise for any distress our investigation caused the Moss family. We declined the Moss family's claim based on the findings of a report from an independent forensic expert, combined with other supporting evidence. The family then commissioned their own forensic report, which reached a different conclusion, and we will settle the claim and reimburse them as a result. 

'It is rare, but experts can sometimes disagree and, if this occurs, we will factor it into our decision, as we have done in this case.' 

In light of the case, the insurer is reconsidering its position of not sharing with customers forensic reports that have helped it decide on a claim.

• Find out more: the effects of claiming on your insurance premium

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Are there issues with how insurers investigate fraud?

It goes without saying that insurers have an obligation to investigate and work to prevent fraud - as it's estimated to cost the industry (and therefore insurance customers) billions each year. However, is this duty adequately balanced against insurers' obligations to treat individual customers fairly? 

We spoke with a claims expert (who asked not to be named) who has worked for decades in claims handling departments with a variety of insurers. Importantly, these don’t include RSA. However, speaking more generally about the industry, they told us that experiences like those endured by Francis and his wife are ‘definitely not a one-off,’ and feels the culture needs to change.

They said claims handlers, fraud investigators and companies working on behalf of insurers (such as loss adjusters) will have differing priorities in accordance with their roles - claims handlers, for example, prioritise saving time by efficiently resolving claims, while fraud teams tend to be incentivised to save the insurer money through preventing fraud.

Where fraud is factually proven, these priorities aren’t at odds. However, where it’s suspected, different teams can ‘come to loggerheads’. Suspected fraud is - by definition - ‘down to somebody’s interpretation’ of evidence or ‘indicators’. An indicator that can draw the attention of a fraud team could be something as basic as the timing of a claim - for example, if it’s made within a month of the policy being taken out.

What to do if you're accused of insurance fraud

When we surveyed 1,989 car insurance claimants and 1,509 home insurance claimants in November 2021, 6% of the former felt that - to some degree - the insurer didn't feel their most recent claim was genuine. It was 10% among the home insurance claimants. If you've made a claim in good faith, but you feel it's coming into question, there are some steps worth taking to keep things on track.

1. Keep a chronology of events

As far as you can, keep accurate records of what happened, both in terms of the incident leading to the claim - and the claim itself. Be clear, consistent and detailed with the insurer about what you know and what you don't. In addition, note what advice the insurer - or any companies working with it - give you. And if you can have it confirmed in writing. Claims can be complex, so keeping organised records of what's happening and why can always be useful. 

2. If a claim is declined, ask for detail

If the insurer declines your claim, always make sure you're given a clear understanding of why they've made that decision. This is key if you want to dispute their reasoning. Request a written explanation.

3. Make a complaint

If you have a problem with the outcome of a claim or how the insurer has handled it, you should make a formal complaint. Be sure to do so in writing, and to explicitly state why you're dissatisfied and how you would like the company to resolve the matter. The insurer may not agree - but one way or another, it's supposed to resolve complaints within eight weeks.

• Find out more: how to complain to your insurer

4. Make a Subject Access Request

Depending on the outcome of the formal complaint, it may also be a good time to consider making a Subject Access Request (SAR). You have a legal right to information held about you by a company, which you can request in writing at any time. There are a few exceptions where companies can withhold some information, which includes information that can identify other people, and also information that could potentially affect a criminal investigation.

Nonetheless, making such a request could provide useful information for you about how fairly and competently your claim or complaint was handled. It also shows that you're serious about challenging the insurer's decision.

•  Find out more: how to make a Subject Access Request  

5. Complain to the FOS

If the insurer doesn't satisfactorily resolve your complaint, go to the Financial Ombudsman Service. There's no guarantee it will find in your favour, but the service is free to use and doesn't legally prevent you from pursuing other alternatives if it doesn't uphold your complaint. It's worth noting that the FOS can take months to resolve cases.

In some cases, such as the Mosses's, the case can hinge on expert evidence, and you may need to commission your own to counter an insurer's case. Bear in mind that this is a costly route to go down and won't necessarily provide you with the opinion you were hoping for - so you'll need to decide carefully if it's a financial risk you can afford. Before committing financially to this route, you should also clarify with the FOS what specific kind of expert view they would consider relevant.

• Find out more: how to complain to the Financial Ombudsman Service

6. Try the small claims court

If you're unhappy with a FOS ruling, you have the remaining option of taking the matter to the small claims court. However, if you're here, it's worth asking yourself if it is likely to rule any differently on your case than the ombudsman. 

You can use the small claims court process if you're claiming £10,000 or less in England and Wales, £5,000 or less in Scotland and £3,000 or less in Northern Ireland.

• Find out more: how to use the small claims court