Upheld: unfair policy cancellation and claim denial; inadequate disclosure of policy obligations complaint against Watford Insurance Company Europe Limited

Decision detail

Summary

Mr B purchased a motor insurance policy in July 2023 as a Security Officer but began part-time taxi driving in October 2023 without informing Watford. When Mrs J made a claim following a collision in March 2024, Watford discovered the occupation change and avoided the policy, seeking to recover £10,701 in claim costs. The ombudsman found that Watford failed to adequately highlight the requirement to report occupation changes, as it was buried on page 34 of the policy and ambiguously referenced in the IPID as a change in 'personal circumstances'. The ombudsman upheld the complaint, requiring Watford to cease recovery efforts, remove cancellation markers, record the cancellation as Mr B's request, and pay £250 compensation for distress and inconvenience.

The Ombudsman's reasoning

The ombudsman found that while CIDRA did not apply, Watford failed to sufficiently highlight the requirement to report changes in occupation. The requirement was buried on page 34 of the policy terms, and the IPID's reference to 'personal circumstances' was ambiguous and unlikely to convey to consumers that occupation changes must be reported. Given the significance of occupation changes to motor insurance underwriting, the ombudsman concluded it was unfair for Watford to rely on Mr B being aware of this requirement. The ombudsman considered that Mr B genuinely did not realise he needed to report the change and had suffered distress and worry as a result.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website