Upheld: claim rejection based on alleged misrepresentation; improper policy avoidance complaint against Wakam

Decision detail

Summary

Mr A took out a van insurance policy in April 2025, stating he was the owner and registered keeper, when in fact a limited company he owns was the registered owner. When Mr A claimed for theft in May 2025, Wakam rejected the claim citing misrepresentation. However, Wakam had not immediately avoided the policy and instead sent renewal invitations in February and March 2026, with an agent calling Mr A about renewal while knowing of the misrepresentation. The ombudsman found that by offering renewal, Wakam waived its right to avoid the policy and created a reasonable expectation that it was valid. The complaint was upheld, requiring Wakam to reverse the avoidance and consider the claim on its merits in accordance with policy terms.

The Ombudsman's reasoning

Although Wakam had a legal right to avoid the policy under CIDRA due to Mr A's misrepresentation, it did not exercise this right at the time of claim rejection. Instead, Wakam offered to renew the policy despite knowing of the misrepresentation, which constituted affirmation of the contract and waiver of its right to avoid it. This created a reasonable expectation in Mr A's mind that the policy was valid. Even if affirmation did not occur as a matter of law, it would be unfair and unreasonable for Wakam to avoid a contract it made clear it was willing to renew. Therefore, Wakam must consider the claim on its merits in accordance with policy terms.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website