Upheld: GAP / warranty insurance mis-selling complaint against Motors Insurance Company Limited

Decision detail

Summary

T, a limited company, held a commercial vehicle warranty with MICL. When the vehicle required repairs, MICL cancelled the warranty and refused claims, alleging the vehicle had been used for deliveries in breach of policy terms. MICL based this on the vehicle's tax classification, insurance type, high mileage, and items found in the vehicle. T disputed this, providing evidence that the vehicle was used for trade shows with third-party transport of goods, and that a separate vehicle was used for deliveries. The ombudsman upheld the complaint, finding MICL had not demonstrated a breach of eligibility criteria. The tax and insurance classifications do not indicate delivery use, and T's explanations were reasonable and supported by evidence. MICL was directed to reimburse the repair costs with interest, reinstate the warranty, and reconsider the further claim.

The Ombudsman's reasoning

The ombudsman found that MICL failed to demonstrate T breached the warranty eligibility criteria. The tax classification of the vehicle does not inherently indicate use for deliveries, as light goods vehicles must be taxed in this category regardless of use. The 'carriage of own goods' insurance classification is appropriate for transporting tools and equipment, not for commercial delivery services, which would require different insurance cover. T provided reasonable explanations for the items found in the vehicle (trade show attendance with third-party transport of goods). While high mileage might suggest delivery use, it is insufficient evidence without corroborating support, particularly given T's business model of attending trade shows across the UK. MICL's reliance on unsubstantiated claims of prior delivery use and website content was insufficient to override T's contemporaneous evidence.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website