Not upheld: breach of duty of fair presentation of risk; non-disclosure of material fact (directors' previous insolvency) complaint against The New India Assurance Company Limited

Decision detail

Summary

G, a limited company insured with New India since 2019, complained when New India refused to renew its policies and sought to void them from inception, claiming G had failed to disclose that its directors had been involved in a company that entered liquidation in 2009. G argued the proposal form question about 'liquidation administration' was ambiguous and that it had answered correctly. The ombudsman found the question was sufficiently clear when read as a whole to require disclosure of any previous business insolvency. G's failure to disclose this material fact constituted a qualifying breach under the Insurance Act 2015. New India provided reliable evidence it would not have offered cover if aware of the insolvency. The ombudsman upheld New India's right to void the policies and endorsed its offer to waive recovery of approximately £153,000 in net claims paid in exchange for accepting voidance, finding this settlement reasonable and proportionate.

The Ombudsman's reasoning

The ombudsman found that despite G's arguments about the clarity of the question, the proposal form question was sufficiently clear when read as a whole to require disclosure of any previous business insolvency involving the directors. The absence of a comma between 'liquidation' and 'administration' did not create sufficient ambiguity to excuse non-disclosure. The question covered both voluntary and compulsory liquidations, and the position of the question in the form did not diminish its importance given the clear warning at the start of the form. G failed to make a fair presentation of risk, which constituted a qualifying breach under the Insurance Act 2015. New India provided reliable evidence it would not have offered the policy if it had known of the insolvency. As the breach was careless rather than deliberate or reckless, New India was entitled to void the policies but must refund premiums. The ombudsman considered New India's offer to waive recovery of net claims paid to be reasonable and proportionate.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website