Partially upheld: mis-selling - incorrect information about policy benefit calculation complaint against USAY BUSINESS LTD trading as Usay Compare

Decision detail

Summary

Mr T purchased an income protection insurance policy from Usay Compare and was told the benefit would be based on gross annual earnings. When he made a claim, the payments were lower than expected because the policy actually paid benefit based on earnings after expenses but before tax. Usay offered to refund £113.35 in overpaid premiums plus 8% interest and pay £300 compensation. The ombudsman upheld the complaint in part, finding that while Usay's information was incorrect, Mr T could never have obtained a policy paying benefit on gross earnings due to fundamental insurance principles preventing policyholders from profiting. The ombudsman concluded Usay's settlement offer was fair and reasonable.

The Ombudsman's reasoning

The ombudsman found that Usay provided incorrect information about the policy benefit calculation. However, the ombudsman determined that Mr T would not have been able to purchase a policy paying benefit based on gross annual earnings, as this is not how the income protection insurance market operates due to the principle that policyholders cannot profit from insurance. Therefore, Mr T did not suffer the level of financial loss he claimed. The ombudsman concluded that if given correct information, Mr T would still have purchased the policy but at a lower premium for lower cover. The refund of overpaid premiums with interest and £300 compensation for distress and inconvenience was deemed fair and reasonable.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website