Not upheld: policy cancellation and failure to maintain insurance cover complaint against Advantage Insurance Company Limited

Decision detail

Summary

Mr C complained that Advantage Insurance unreasonably cancelled his motor policy, resulting in him being stopped by police for driving without insurance. After Mr C's car was declared a total loss on 20 May 2024 and Advantage paid him the market value on 28 August 2024, Mr C indicated he wanted to retain the car. Advantage's salvage agents contacted Mr C twice (9 and 25 September 2024) to arrange retention, but Mr C did not respond. Advantage then issued formal notice on 3 October 2024 giving Mr C 30 days to either put his retained car back on the policy or add another car, or the policy would be cancelled. The notice was sent by both post and email. Mr C did not respond to this notice and only completed the retention paperwork on 27 November 2024, after the policy was cancelled on 2 November 2024. The ombudsman found the cancellation was correct and in accordance with policy terms, and that the £100 compensation already paid for the confusion caused by Advantage's erroneous final response letter was appropriate.

The Ombudsman's reasoning

The ombudsman found that Advantage correctly followed its policy terms and conditions in cancelling Mr C's policy. Once the total loss settlement was paid on 28 August 2024, Mr C no longer had insurable interest in the car as Advantage owned it until retention paperwork was completed. Advantage provided clear written notice on 3 October 2024 giving Mr C 30 days to either put his retained car back on the policy or add another car, with the notice sent by both post and email to correct addresses. Mr C failed to respond to this notice despite being contacted by salvage agents on two occasions and being informed of the £475 buy-back value on 17 October 2024, well before the 3 November 2024 deadline. The ombudsman noted that Mr C only completed the retention paperwork on 27 November 2024, after the policy had already been cancelled. The ombudsman also found that Advantage's final response letter was confusing and erroneous, but the £100 compensation already paid was appropriate compensation for this confusion rather than for the cancellation itself, which was handled correctly.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website