Partially upheld: unfair claim decline and policy cancellation; breach of policy conditions; misrepresentation complaint against Society of Lloyd's

Decision detail

Summary

Mr J and Miss C complained that Society of Lloyd's unfairly declined a claim and cancelled their buildings insurance policy following a contractor's injury during renovation work at their property. SOL declined the claim and cancelled the policy, citing Mr J and Miss C's failure to disclose the building works before commencement and their late notification of the injury claims (notified in 2023 for an injury occurring in 2021). The ombudsman found that while the claim decline was fair based on the breach of the notification condition, the policy cancellation was unfair because SOL failed to evidence it would have withdrawn cover entirely rather than applying an exclusion. The ombudsman also found that Mr J and Miss C did not misrepresent the policy at inception and that there was insufficient evidence they should have notified SOL of a possible claim before the writ was served. The ombudsman directed SOL to reinstate the policy and remove voidance markers.

The Ombudsman's reasoning

The ombudsman found that Mr J and Miss C did not misrepresent the policy at inception because the property was not undergoing renovation work in October 2020 when the policy commenced; renovation began in April 2021. While there was a breach of the condition requiring notification of structural work before commencement, SOL failed to evidence that it would have withdrawn cover entirely—it stated it would have applied an exclusion relating to contractor liability. Therefore, cancellation from inception was not fair. Regarding the late notification of claims, the ombudsman found insufficient evidence that Mr J and Miss C should have notified SOL sooner, as the letters received did not clearly indicate an intention to pursue legal action until the writ was served. While SOL fairly declined the claim based on the breach of the notification condition, it did not act fairly in cancelling the policy.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website