Partially upheld: failure to settle claim; breach of duty to make fair presentation of risk; qualifying breach under Insurance Act 2015 complaint against Accelerant Insurance UK Limited

Decision detail

Summary

Mr K complained that Accelerant Insurance refused to settle his claim under a Property Owners insurance policy for damage to property 65, one of two rental properties he sought to insure. Accelerant declined the claim based on Mr K's failure to make a fair presentation of the risk, specifically by not disclosing that property 65A (a self-contained flat conversion) was part of the insured property and lacked planning permission and Building Regulations approval. The ombudsman found Mr K did breach his duty to make fair presentation as a commercial customer, and that Accelerant provided sufficient evidence it would have declined cover for property 65 if proper disclosure had been made. This qualified as a qualifying breach under the Insurance Act 2015, entitling Accelerant to treat the policy as offered without that property's coverage. However, the ombudsman found Accelerant was not entitled to avoid the entire policy and ordered it to remove avoidance records and pay £250 compensation for poor claims handling, while upholding its right not to settle the claim.

The Ombudsman's reasoning

As a commercial customer, Mr K had a duty under the Insurance Act 2015 to make a fair presentation of the risk, which included disclosing that the insured property comprised two units (65 and 65A) with different characteristics. The ombudsman found Mr K failed to make a fair presentation because he answered questions as if 65A was not part of the insured property, when it should have been clear to a commercial customer that the entire property was the insured risk. The ombudsman was satisfied Accelerant provided sufficient evidence that it would have declined cover for property 65 if a fair presentation had been made, as 65A lacked planning permission and Building Regulations approval and the property failed electrical safety requirements. This constituted a qualifying breach under the Insurance Act, entitling Accelerant to treat the policy as if offered without cover for property 65. However, Accelerant was not entitled to avoid the policy entirely, and poor claims handling warranted compensation.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website