Not upheld: misrepresentation and policy cancellation complaint against Mulsanne Insurance Company Limited

Decision detail

Summary

Mr F and Mrs P complained that Mulsanne Insurance unfairly cancelled their car insurance policy and refused to pay a claim after discovering that Mrs P's three speeding convictions with nine penalty points had not been disclosed during the application process. Mr F stated he had not asked Mrs P about her convictions because he believed her to be a safe driver. The ombudsman found that the application question regarding driving convictions was clear and unambiguous, and that Mr F's failure to check Mrs P's driving record either directly or via the government's licence checking service constituted reckless misrepresentation under the Consumer Insurance (Disclosure and Representations) Act 2012. Under CIDRA, reckless misrepresentation permits an insurer to cancel the policy without offering alternative terms, even if cover would have been available at a higher premium. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that the question about driving convictions was clear and unambiguous. Mr F failed to take reasonable care by not checking Mrs P's driving record either directly with her or via the government's licence checking service. The ombudsman determined this constituted reckless misrepresentation under CIDRA because Mr F did not care whether his answer was true or not. Under CIDRA, when a misrepresentation is reckless rather than merely careless, the insurer is entitled to cancel the policy without offering alternative terms, even if it would have covered the consumer at a higher premium.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website