Upheld: Motor insurance, claim handling complaint against First Central Underwriting Limited

Decision detail

Summary

Mr S complained that First Central unfairly declined his motor insurance claim after he was involved in a collision while commuting, despite his policy only covering social, domestic and pleasure use. The ombudsman found that Mr S had made a careless misrepresentation by failing to disclose commuting use from the inception of the policy, as he did not take reasonable care when selecting the policy use category. However, because Mr S genuinely believed commuting fell under standard personal use and had disclosed his workplace location, the misrepresentation was careless rather than deliberate. Under the Consumer Insurance (Disclosure and Representations) Act 2012, the fair remedy was for First Central to proportionately settle the claim less the additional premium that would have been charged if commuting had been correctly included.

The Ombudsman's reasoning

The ombudsman found that Mr S made a careless misrepresentation when he failed to disclose commuting use, as he did not take reasonable care when answering the question about car use. However, because Mr S disclosed the day location at his workplace and was genuinely unaware that commuting was a separate category from standard personal use, the misrepresentation was careless rather than deliberate or reckless. Under CIDRA, when a misrepresentation is careless and the insurer would have offered the policy on different terms (at a higher premium), the fair remedy is proportionate settlement of the claim.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website