Not upheld: misrepresentation on insurance application and proportionate claim settlement complaint against AXA Insurance UK Plc

Decision detail

Summary

Mr and Mrs R complained to AXA Insurance about a partial settlement of their residential landlord insurance claim following tenant-caused property damage. AXA discovered that Mrs R had misrepresented the tenant's employment status when taking out the policy—the tenant was unemployed and receiving benefits, not employed as Mrs R had indicated. AXA settled the claim proportionately at 50%, reflecting the ratio of the premium paid to what it would have charged if it had known the true employment status (double the amount). The ombudsman applied CIDRA principles and found the misrepresentation was clear and qualifying, making the proportionate settlement remedy fair and reasonable. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied CIDRA principles despite the policy being commercial insurance, as Mrs R's circumstances were similar to a consumer. The question about tenant employment status was clear and Mrs R answered it incorrectly—a full-time carer receiving benefits is not employed in the ordinary sense, regardless of DWP classifications for benefit purposes. The misrepresentation was qualifying because AXA would have charged significantly higher premiums (double) if it had known the true position. The proportionate settlement remedy (50% of claim) was the appropriate remedy for careless misrepresentation under CIDRA and was fair and reasonable.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website