Not upheld: policy avoidance for careless misrepresentation; claim denial; recovery of third-party claim costs complaint against Alwyn Insurance Company Limited

Decision detail

Summary

Miss M complained that Alwyn unfairly avoided her motor insurance policy, refused to pay her claim, and sought to recover third-party costs after discovering that a named driver on the policy had undisclosed motoring convictions. Alwyn had asked a specific question about convictions in the last five years, and Miss M confirmed there were none. During claim investigation following a road traffic collision, Alwyn discovered three convictions within the relevant period. The ombudsman found this was a careless qualifying misrepresentation under CIDRA, entitling Alwyn to avoid the policy and decline the claim. The ombudsman also found Alwyn's claim handling was fair and reasonable, and that it was entitled to recover its outlay under the Road Traffic Act 1988, with a County Court judgment confirming the named driver's liability. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied The Consumer Insurance (Disclosure and Representations) Act 2012 (CIDRA) and found that Miss M failed to take reasonable care not to make a misrepresentation when she answered 'no' to the specific question about motoring convictions. The question was clear and specific, and a reasonable consumer would have confirmed this information with the named driver before applying. Alwyn's underwriting guidance demonstrated this was a qualifying misrepresentation as it would not have offered the policy at all had the convictions been disclosed. Under CIDRA, for a careless qualifying misrepresentation, Alwyn was entitled to avoid the policy, decline the claim, and recover costs paid to third parties. The ombudsman found Alwyn's claim handling was fair and reasonable, and that it was entitled to recover its outlay under section 151(8) of the Road Traffic Act 1988. The Court judgment on liability was a matter for the Courts, not the ombudsman.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website