Not upheld: claim decline and policy cancellation based on alleged fraudulent presentation of documents complaint against Hiscox Insurance Company Limited

Decision detail

Summary

B, a limited company, complained that Hiscox unfairly declined its fire damage claim and cancelled its business protection insurance policy based on alleged fraud. Hiscox identified that an £8,950 invoice for debris removal submitted by B was created by Mr B (B's director) rather than the contractor and did not reflect actual work or costs incurred (only £400 was actually paid). Although B argued the underlying loss was genuine and later attempted to withdraw the invoice, the Ombudsman found Hiscox acted fairly in concluding the document was presented misleadingly and was entitled to decline the entire claim and cancel the policy in line with the fraud term and Insurance Act 2015. The complaint was not upheld.

The Ombudsman's reasoning

The Ombudsman determined that the central issue was whether Hiscox acted fairly in relying on the fraud term to decline the claim and cancel the policy, not whether fraud actually occurred. The invoice was presented as evidence of completed third-party work but did not reflect the true position regarding work done or costs incurred. Although Mr B later attempted to withdraw the invoice and no payment was ultimately made by Hiscox, the document had already been submitted as part of the claim presentation, and the Ombudsman found this was sufficient for Hiscox to reasonably conclude the claim was presented with misleading information. The Versloot Dredging case supported that an insurer can refuse to pay an entire claim where it has been fraudulently exaggerated, even if other parts are genuine. The Insurance Act 2015 proportionate remedies provisions did not apply as they only apply to separate earlier events, not different elements of the same claim.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website