Not upheld: claim rejection - lack of insurable interest complaint against Aviva Insurance Limited

Decision detail

Summary

B, a limited company, claimed for a stolen vehicle under a commercial vehicle insurance policy held with Aviva. However, the policy was registered in the name of B2, a linked company, while the vehicle was owned by B. Aviva rejected the claim as the vehicle did not fall within the policy's scope of cover, which only extended to vehicles belonging to or hired/leased/lent to B2. B argued this was an administrative error with no intention to deceive and noted that Aviva subsequently accepted a new policy for B. The ombudsman upheld Aviva's rejection, finding that the error was not Aviva's responsibility and that the subsequent policy acceptance did not retrospectively create coverage for the prior loss.

The Ombudsman's reasoning

The policy clearly provided cover only for vehicles belonging to, hired, leased or lent to B2. Since the stolen vehicle was owned by B and not subject to any hire, lease or loan agreement with B2, it fell outside the scope of cover under B2's policy. Although the ombudsman accepted that the incorrect policy setup was an administrative error with no intention to deceive, the error was not made by Aviva and therefore Aviva cannot reasonably be required to provide indemnity for a loss that was not covered under the policy terms. The subsequent acceptance of a new policy for B does not retrospectively create coverage for the prior loss.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website