Not upheld: misrepresentation at policy inception and policy cancellation complaint against Tesco Underwriting Limited

Decision detail

Summary

Mr M and Mrs M complained about Tesco Underwriting Limited's decision to cancel their home insurance policy back to inception and decline their claim following the discovery of cracking at their property. TUL based the cancellation on misrepresentation regarding subsidence at policy inception, having discovered a previous subsidence claim on the CUE database. Although Mrs M was unaware of the previous claim due to the seller's non-disclosure, the home buyers report she commissioned prior to purchase clearly indicated signs of damage potentially caused by subsidence and recommended specific investigations. The ombudsman found this constituted a qualifying careless misrepresentation under CIDRA, as the policy question asked whether the property was free from 'signs of' subsidence. TUL's actions were deemed fair and reasonable, including their decision to cancel rather than void the policy and not record the claim externally, which was more favourable to the complainants than required by law.

The Ombudsman's reasoning

The ombudsman found that Mrs M misrepresented the property's condition at policy inception. Although Mrs M was unaware of the previous subsidence claim due to the seller's non-disclosure, the home buyers report she obtained prior to taking out the policy clearly indicated signs of damage potentially caused by subsidence and tree root damage, and recommended specific investigations. The question asked whether the property was free from 'signs of' subsidence, not merely whether it had been damaged. This was a qualifying misrepresentation under CIDRA because TUL's underwriting criteria showed they would not have offered cover had Mrs M answered 'no'. TUL treated it as careless misrepresentation and took action more favourable to the complainants than CIDRA permitted, including cancelling rather than voiding the policy and not recording the claim externally.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website