Not upheld: policy avoidance for misrepresentation; claim denial complaint against Marshmallow Insurance Limited

Decision detail

Summary

Mr A complained that Marshmallow Insurance avoided his motor insurance policy, declined his claim, and retained his premiums after discovering that the car's V5 registration document was in the previous owner's name, not his. Marshmallow considered this a reckless misrepresentation of car ownership. The ombudsman found that Mr A had been asked a clear question directing him to check the V5 document and had failed to take reasonable care in answering it incorrectly. Although Mr A claimed to be new to the UK and unfamiliar with car registration requirements, he had actually lived in the UK for six years and been in and out of the country for over a decade. The ombudsman concluded that under CIDRA, Marshmallow was entitled to avoid the policy and decline the claim because it would not have offered cover if the correct information had been disclosed, and therefore did not uphold the complaint.

The Ombudsman's reasoning

The ombudsman applied CIDRA and found that Mr A failed to take reasonable care not to make a misrepresentation when he stated he was the car's registered keeper. The question was clear and specific, directing Mr A to check the V5 document. Although Mr A claimed unfamiliarity with UK law as a new arrival, he had actually been in and out of the UK for over a decade and living there for six years, so he should have had the knowledge of a reasonable consumer. The misrepresentation was reckless because Mr A either knew or did not care whether his answer was untrue, and knew or did not care that the matter was relevant to the insurer. Marshmallow provided evidence that it would not have offered cover at all if the correct information had been disclosed, making this a qualifying misrepresentation under CIDRA. Therefore, Marshmallow was entitled to avoid the policy and decline the claim.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website