Not upheld: Home insurance claim disputes complaint against Liverpool Victoria Insurance Company Limited

Decision detail

Summary

Mr F complained that LV avoided his motor insurance policy and refused to pay his claim after discovering the car had been modified. Mr F had answered 'No' when asked if the car had been modified, but LV's engineer identified multiple modifications including alloy wheels, lights, and suspension changes. The ombudsman obtained the original sales advert which showed the car without these modifications, indicating they were added after Mr F's purchase. However, Mr F admitted knowing about at least some modifications, particularly the alloy wheels, yet still answered 'No' to the question. The ombudsman found this constituted a reckless qualifying misrepresentation under CIDRA, entitling LV to avoid the policy and retain the premium. Mr F also complained about claim handling delays and damage to the car in storage, but the ombudsman found the handling reasonable and the storage company's offer to repair scratches fair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied The Consumer Insurance (Disclosure and Representations) Act 2012 (CIDRA). The evidence showed that most modifications were made after Mr F purchased the car, and Mr F knew about at least some of them (particularly the alloy wheels) but still answered 'No' to a question explicitly asking about modifications. This constituted a reckless qualifying misrepresentation because: (1) Mr F failed to take reasonable care; (2) LV would not have offered the policy if the true position had been disclosed; and (3) Mr F acted recklessly by knowingly providing an incorrect answer to a material question. Under CIDRA, LV was entitled to avoid the policy, refuse all claims, and retain the premium. Claims handling was reasonable given the need to investigate and refer to underwriters. The storage company's offer to repair scratches was fair, and there was insufficient evidence that missing items were in the car when stored.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website