Upheld: misrepresentation - policy avoidance and claim denial complaint against Tesco Underwriting Limited

Decision detail

Summary

Mrs H complained that Tesco cancelled her motor insurance policy and refused to pay her theft claim. During the policy term, she updated Tesco about a new car but incorrectly stated it was owned by herself or her husband, when it was actually owned by her husband's limited company. Tesco discovered this misrepresentation when Mrs H claimed for the stolen car and cancelled the policy while demanding full premium payment. The ombudsman upheld the complaint, finding that while Tesco was entitled to avoid the policy due to careless misrepresentation, it must record the avoidance from the date of misrepresentation (3 March 2025) rather than the later cancellation date, and must reimburse unused premiums with interest plus £100 compensation.

The Ombudsman's reasoning

Under CIDRA 2012, Mrs H failed to take reasonable care by not disclosing that the car was owned by a limited company. The misrepresentation was careless (not deliberate or reckless) because she did not consider the commercial implications of company ownership for domestic use. As a careless qualifying misrepresentation where Tesco would not have offered cover, Tesco was entitled to avoid the policy. However, the correct remedy under CIDRA is to avoid the policy from the date of misrepresentation (3 March 2025) and return unused premiums with interest, not to cancel it later and demand full premiums.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website