Not upheld: Motor insurance, claim handling complaint against Lexham Insurance Consultants Limited

Decision detail

Summary

Mr S complained that Lexham Insurance Consultants Limited mishandled his motorcycle insurance application by confirming acceptance of his three-year No Claims Discount (which had expired in January 2022) before policy inception, but then failing to honour that confirmation and increasing his premium by £905.18. Lexham admitted the error and offered Mr S either a full refund or payment of the additional premium with a £101 set-up fee waived. The ombudsman found that while Lexham's error was clear, the remedies offered were fair and reasonable, and Mr S had viable alternatives such as purchasing a policy elsewhere. The complaint was not upheld as the ombudsman concluded Lexham could not fairly be held responsible for the consequences of Mr S's choice to pay the additional amount rather than exercise his alternatives.

The Ombudsman's reasoning

The ombudsman acknowledged that Lexham made a clear error in confirming acceptance of the expired NCD and then failing to honour that confirmation. However, the ombudsman found that Lexham's remedies were fair and reasonable because: (1) a full refund would have placed Mr S in the same financial position as if he had not bought the policy; (2) Mr S had the ability to purchase alternative policies elsewhere; (3) there was no evidence that Mr S's NCD was irrevocably lost or that alternative policies were unavailable or more expensive; and (4) the waived set-up fee of £101 aligned with FOS compensation guidelines. The ombudsman concluded that while Mr S suffered inconvenience, he could not fairly hold Lexham responsible for the consequences of his choice to pay the additional premium rather than exercise his alternatives.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website