Upheld: unfair claim decline and misapplication of policy terms; failure to apply CIDRA complaint against First Central Underwriting Limited
Financial Ombudsman decision DRN-6062120 of 2026-05-28T00:00:00+00:00. unfair claim decline and misapplication of policy terms; failure to apply CIDRA complaint against First Central Underwriting Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-6062120 |
|---|---|
| Decision date | 2026-05-28T00:00:00+00:00 |
| Firm | First Central Underwriting Limited |
| Product | Motor insurance |
| Claim type | unfair claim decline and misapplication of policy terms; failure to apply CIDRA |
| Outcome | Upheld |
| Remedy | First Central must: (1) reassess the claim in line with remaining policy terms and conditions applying CIDRA remedies for careless misrepresentation; (2) pay £300 compensation for distress and inconvenience; (3) reimburse Mr I's solicitor's fees (upon proof of payment) with 8% simple interest from date of payment to date of reimbursement. |
Summary
Mr I held a motor insurance policy with First Central limited to social, domestic and pleasure use. When he was involved in an accident in October 2023 while dropping keys to a friend after work, First Central declined the claim and sought to recover the third-party settlement from him, arguing he was commuting outside policy terms. The ombudsman found that CIDRA applied because First Central had specifically asked about car usage during the online application process. Although Mr I carelessly failed to disclose his commuting use despite knowing the car would be used that way, this constituted a careless misrepresentation under CIDRA rather than a simple breach. Since First Central confirmed it would have offered commuting cover at a 1% premium increase, the appropriate remedy was proportionate claim reduction, not repudiation. The ombudsman upheld the complaint and ordered reassessment of the claim, £300 compensation for distress, and reimbursement of solicitor's fees with interest.
The Ombudsman's reasoning
The ombudsman found that CIDRA applied because First Central specifically asked about car usage during the online application and factored this into its underwriting decision. Although Mr I failed to take reasonable care in answering the question given its clarity and his knowledge of commuting use, this constituted a careless misrepresentation rather than a breach of policy terms. Since First Central confirmed it would have offered commuting cover at a 1% premium increase, the misrepresentation was qualifying under CIDRA. The appropriate remedy was proportionate reduction of the claim rather than outright repudiation. First Central's failure to apply CIDRA caused considerable distress and unnecessary legal costs.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| First Central Underwriting Limited, all decisions | 205 | 42% |
| Motor insurance, all decisions | 23,874 | 35% |
Source
Read the original decision on the Financial Ombudsman Service website