This type of thing is becoming more and more prevalent. Initially, as earlier outlined, an insurance policy is one of upmost good faith. Underwriters would determine whether to accept a risk on the basis of what had been disclosed to them or on what terms they would accept a risk. In the past, a previous claim of a few hundred euro or indeed a few thousand would not usually deter an underwriter from accepting a risk. However, in the current market, some Insurers stipulate that they will not take on any risks for which there has been a previous claim with the last number of years and the views of a prudent underwriter are not taken into account.
Regardless of how innocent or seemingly irrelevent the disclosure of a previous claim may be, many, if not most insurers will cancel a policy ab initio when the previous claim comes to light, if this has not been disclosed at inception. The issue of whether not the underwriter would have taken the risk had he/she been aware of the previous claim is not considered relevent and is generally not taken into account.
Some of these cases have been referred to the ombudsman for a ruling and he too has discounted whether a prudent underwriter would have taken the risk with the knowledge of a previous claim. The ombudsman has found that Insurers are within their rights to cancel a policy regardless of how trivial or irrelevent a non disclosed previous claim appeared to be. Some may say that relying upon this type of non disclosure aspect is verging on sharp practice, however, the Ombudsman does not agree, at least not in his ruling. I dont believe that this has been tested by the courts in Ireland in the recent past.
As regards the best approach, I do not believe that appointing a loss assessor will be of any benefit whatsoever in this instance. If anything, the appointment of a Loss Assessor may entrench Insurers in their position. Threatening the ombudsman at this stage will also likely entrench Insurers view, paticularly as they are no doubt comfortable in their position knowing of previous Ombudsmans decision and previous legal advise that they would have obtained.
In the event that there is a non disclosure issue, particularly of an apparently minor nature, I would strongly endorse the last line of Ravima post. In my experience of Zurich, they are not as zealous in their approach and I have seen cases where they have demonstrated a "good nature".