In Qayyum Ansari v New India Assurance Ltd  EWCA Civ 93 the Court of Appeal considered Qayyum Ansari's (Ansari) appeal against the decision at first instance that Ansari's claim under his insurance policy with New India Assurance (NIA) should be dismissed.
On 4 May 2005 Ansari entered into a standard 12 month commercial property insurance policy with NIA. The proposal form stated that the premises were protected by an automatic sprinkler system and the policy itself contained a term to the effect that the policy would be cancelled if there was a material change in the facts stated in the proposal form. The policy also contained an extension which stated that cover would not be invalidated by act of neglect of which the owner was not aware. On 7 September 2005 a fire broke out at Ansari's premises, causing considerable damage. At the time the premises were leased to a Mr Asim, who was using them for the purposes of his business. Ansari subsequently made a claim on his insurance, which was rejected by NIA when it became apparent that the automatic sprinkler system had not been connected to the mains water supply at the time of the fire.
The Court of Appeal upheld the decision of the court below. The reference in the proposal form to protection by a sprinkler system meant that there had to be a properly functioning sprinkler system, not merely one that was capable of functioning. Although temporarily switching off the sprinkler system would not mean that the statement in proposal form ceased to be accurate, in the present case, where the system had been permanently switched off, there clearly was a change in facts as stated in the proposal form. This change was a material change, as the absence of a sprinkler system represented a significant alteration of the nature of the subject matter of the insurance and took the risk beyond that which was contemplated by the parties at the time the policy was issued. Finally, the Court of Appeal held that on the facts, Ansari had been aware that the sprinkler system was not in operation, and as such could not rely on the extension to cover relating to acts done without the knowledge of the owner of the property.
Whilst the Court was willing to countenance an insured not complying precisely with the terms of the proposal form without invalidating his insurance this case demonstrates the need for insureds to be aware of anything they do which will materially change the risk insured.