Upheld: unfair policy avoidance and claim handling complaint against UK Insurance Limited trading as Direct Line
Financial Ombudsman decision DRN-6206037 of 2026-06-10T00:00:00+00:00. unfair policy avoidance and claim handling complaint against UK Insurance Limited trading as Direct Line. Outcome: Upheld.
Decision detail
| Reference | DRN-6206037 |
|---|---|
| Decision date | 2026-06-10T00:00:00+00:00 |
| Firm | UK Insurance Limited trading as Direct Line |
| Product | Home insurance |
| Claim type | unfair policy avoidance and claim handling |
| Outcome | Upheld |
| Remedy | UKI directed to: (1) Pay Mrs M £316.55 representing direct financial loss from the policy avoidance; (2) Pay 8% simple interest on this sum from the date Mrs M incurred the loss to settlement date; (3) Remove any avoidance marker from internal and external databases; (4) Pay Mrs M £300 in recognition of distress and inconvenience caused by the unfair avoidance and failure to clearly explain the decision. |
Summary
Mrs M claimed under her property insurance policy with UKI for a bulging wall, which UKI declined and avoided the policy, claiming Mrs M made a careless misrepresentation at renewal by not disclosing subsidence issues. The ombudsman found Mrs M did not misrepresent as the bulge was a latent defect only discovered after a conservatory removal and subsequent survey, and a reasonable consumer would only declare known issues. While the claim decline was fair under the policy's faulty workmanship exclusion, the policy avoidance was unfair. UKI was directed to pay £316.55 for the additional insurance costs Mrs M incurred, 8% interest, remove the avoidance marker, and pay £300 compensation for distress and inconvenience.
The Ombudsman's reasoning
The ombudsman found that Mrs M did not make a misrepresentation because a reasonable consumer would understand the subsidence question as relating to known issues, not latent defects that only became apparent after a conservatory removal and subsequent survey. Since no misrepresentation occurred, UKI had no entitlement to apply remedies under CIDRA and the policy avoidance was unfair. However, the claim decline was fair because the policy terms excluded claims due to faulty workmanship, and both experts agreed the bulge was caused by poor construction of the conservatory foundations. The financial loss of £316.55 (the difference between the original premium and replacement insurance cost) was a direct result of the unfair avoidance.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| UK Insurance Limited trading as Direct Line, all decisions | 13 | 15% |
| Home insurance, all decisions | 20,668 | 38% |
Source
Read the original decision on the Financial Ombudsman Service website