Partially upheld: claim decline and claim handling - unfair reliance on fraud condition complaint against Aviva Insurance Limited

Decision detail

Summary

Mr S claimed for flood damage under his Aviva home insurance policy in September 2024. During the initial notification call, he stated the property was unoccupied and being renovated, but later claimed it was his main residence. Aviva arranged repair works but declined the claim in December 2024 on fraud grounds, citing the conflicting statements about occupancy. The ombudsman found Aviva fairly relied on Mr S's initial clear statements that the property was unoccupied, but acted unfairly in declining the claim on fraud grounds since the policy contained no unoccupancy exclusion for flood damage. By proceeding with works, Aviva affirmed the contract and lost the right to avoid it entirely. The ombudsman partly upheld the complaint, requiring Aviva to pay reasonable costs of disposed items and £500 compensation.

The Ombudsman's reasoning

The ombudsman found it was fair for Aviva to rely on Mr S's clear statements during the initial call that the property was unoccupied, as he confirmed it was acceptable to answer questions and provided unambiguous responses. The low utility costs and other evidence Mr S provided were insufficient to contradict his initial statements. However, the ombudsman found Aviva acted unfairly in declining the claim on grounds of fraud, as the alleged dishonesty did not affect whether the claim should be paid and the policy contained no unoccupancy exclusion for flood damage. By proceeding with works despite the occupation dispute, Aviva affirmed the contract and lost the right to avoid the policy entirely. The ombudsman determined that Aviva's offer to cover BER items and not pursue costs was fair and reasonable, as Mr S ultimately benefited from Aviva's error in proceeding with the claim.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website