Partially upheld: misrepresentation on insurance application and claim settlement reduction complaint against Marshmallow Insurance Limited

Decision detail

Summary

Mr V complained that Marshmallow unfairly reduced his claim settlement after his stolen car was declared a total loss, citing that the previous claim he failed to disclose was notification-only with no financial impact. Marshmallow had reduced the settlement proportionately based on Mr V's careless misrepresentation regarding his claims history. The ombudsman found that Mr V failed to take reasonable care in answering a clear question about previous claims and that Marshmallow was entitled under CIDRA to reduce the settlement proportionately, as its underwriters confirmed they would have charged a higher premium if the claim had been disclosed. The complaint was partially upheld only regarding Marshmallow's poor communication, with £100 compensation awarded for distress and inconvenience.

The Ombudsman's reasoning

The ombudsman found that Mr V failed to take reasonable care in answering a clear question about previous claims, constituting a careless misrepresentation under CIDRA. Marshmallow provided evidence that it would have charged a higher premium if the claim had been disclosed, making it a qualifying misrepresentation. Under CIDRA, Marshmallow was entitled to reduce the claim settlement proportionately. However, the ombudsman upheld the complaint in part due to poor communication by Marshmallow, awarding £100 compensation for distress and inconvenience caused by the firm's handling of the matter.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website