Not upheld: policy avoidance based on misrepresentation regarding business use of insured property complaint against Accredited Insurance (Europe) Ltd

Decision detail

Summary

Mr K complained that Accredited Insurance unfairly avoided his home insurance policy and declined his claim for dropped bay windows after discovering his wife operated a business from the home. Mr K had confirmed during policy arrangement that the home had never been used for business purposes, despite this being factually incorrect. The ombudsman found this constituted a qualifying misrepresentation under CIDRA. Although Mr K argued the business use was immaterial and small-scale, the ombudsman determined it was Accredited's role to assess materiality, not his, and Accredited's underwriting criteria clearly excluded such business use. The ombudsman upheld Accredited's decision to avoid the policy and decline the claim.

The Ombudsman's reasoning

Under CIDRA, Mr K was asked a straightforward question about business use and agreed to an assumption that was factually incorrect. The ombudsman found this constituted a qualifying misrepresentation (careless rather than deliberate/reckless). It was not Mr K's role to determine materiality; that was Accredited's decision. Accredited demonstrated the misrepresentation was entirely material to its underwriting decision, as it would never have offered cover if the correct information had been provided. Therefore, Accredited could fairly avoid the policy and decline the claim.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website