Upheld: unfair claim refusal and misapplication of policy terms complaint against First Central Underwriting Limited
Financial Ombudsman decision DRN-6337298 of 2026-05-26T00:00:00+00:00. unfair claim refusal and misapplication of policy terms complaint against First Central Underwriting Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-6337298 |
|---|---|
| Decision date | 2026-05-26T00:00:00+00:00 |
| Firm | First Central Underwriting Limited |
| Product | motor insurance |
| Claim type | unfair claim refusal and misapplication of policy terms |
| Outcome | Upheld |
| Remedy | First Central must reconsider Mr R's claim under the remaining terms of his policy and apply a proportionate settlement based on the relevant proportion of premium actually paid compared to the premium that would have been paid but for the misrepresentation (approximately 1%). This proportionate settlement may also be applied to any sums First Central seeks to recover from Mr R. |
Summary
Mr R purchased motor insurance through a comparison website, selecting 'social only' use instead of 'social including commuting', despite actually using his car for commuting. When Mr R had an accident while commuting, First Central refused to indemnify him and demanded repayment of the £9,800 third party settlement. The ombudsman found this unfair because First Central failed to apply the Consumer Insurance (Disclosure and Representations) Act 2012, which requires proportionate settlement for careless misrepresentations. Since First Central confirmed it would have offered the policy with commuting for only 1% more premium, the ombudsman required First Central to reconsider the claim with a proportionate settlement reflecting this premium ratio rather than refusing it entirely.
The Ombudsman's reasoning
The ombudsman found that Mr R's failure to select commuting coverage constituted a qualifying misrepresentation under CIDRA, as First Central would have offered the policy on different terms (higher premium). However, the misrepresentation was careless rather than deliberate, as evidenced by Mr R's later job change making commuting unnecessary. Under CIDRA, for careless misrepresentation, First Central must settle claims proportionately based on the premium ratio (actual premium paid versus premium that would have been paid with commuting), rather than refusing the claim entirely.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| First Central Underwriting Limited, all decisions | 207 | 42% |
Source
Read the original decision on the Financial Ombudsman Service website