Dishonesty exclusion

For solicitors, the Minimum Terms & Conditions give insurers very little scope for taking policy points against their insureds.  Their main way out is the dishonesty exclusion.

Allegations of dishonesty are notoriously difficult to dispel.  The test for dishonesty was set out by the Court of Appeal in Starglade v Nash [2010] EWCA 1314, but the test remains difficult to apply.  It is largely – but not entirely – an objective test, and  “Nelsonian” blindness may be enough.

We have represented a number of Insureds facing attempts by insurers to invoke the dishonesty exclusion, e.g. in the context of allegedly ‘sham’ partnerships, or mortgage frauds which the solicitor failed to spot.  We also represent Insurers, so we see both sides. 

One of the difficult issues is how to deal with an invitation to attend an ‘indemnity conference’. 

In some cases we have been able to come up with ‘win/win’ solutions for both insurer and insured: e.g. the insured admits that he was not a true partner in the firm, regardless of what he thought at the time, enabling the insurer to defend the third party’s claim on the same basis.