Not upheld: misrepresentation on insurance application and policy cancellation complaint against Highway Insurance Company Limited

Decision detail

Summary

Miss A complained that Highway Insurance cancelled her car insurance policy and refused to refund her premium after discovering she had misrepresented her claim history when applying for cover. Miss A had declared no more than one claim in the previous three years but had actually made three claims. Miss A argued the declaration question was ambiguous and only related to fault claims. The ombudsman found that Miss A acted recklessly under the Consumer Insurance (Disclosure and Representations) Act 2012 because she had seen the question before on previous policies and clearly read it this time, yet failed to disclose the correct information. Accordingly, the ombudsman upheld Highway's right to cancel the policy from inception and retain the premium, and did not uphold the complaint.

The Ombudsman's reasoning

The ombudsman applied the Consumer Insurance (Disclosure and Representations) Act 2012 (CIDRA). Although Miss A claimed the question was ambiguous and related only to 'fault' claims, the ombudsman found the question was clear. The ombudsman determined that Miss A acted recklessly rather than carelessly because: (1) she had seen the question before on previous policies; (2) she clearly read it this time (as evidenced by her claim it was ambiguous); (3) she did not care whether her answer was true; and (4) she knew the information was relevant to the insurer. Under CIDRA, a qualifying misrepresentation that is deliberate or reckless allows the insurer to retain the premium.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website