Upheld: Travel / life insurance claim disputes complaint against Lloyds Bank General Insurance Limited

Decision detail

Summary

Mr R claimed on his property insurance policy with Lloyds Bank General Insurance Limited for water damage discovered in early 2023. In October 2024, after nearly two years of claim handling, Lloyds discovered that Mr R had undisclosed County Court Judgments (CCJs) on his credit history predating the policy. Lloyds voided the policy retroactively to 2022 and declined to cover the claim. The ombudsman upheld Mr R's complaint, finding that while Lloyds acted within legal requirements, it was unfair to void the policy so deep into the claim based on information that could have been discovered if Lloyds had checked Mr R's details when the claim was submitted. The ombudsman ordered Lloyds to reinstate the policy, continue dealing with the claim, and pay £400 compensation.

The Ombudsman's reasoning

The ombudsman found that while Lloyds acted within the legal framework of CIDRA (Consumer Information Disclosure and Representations Act 2012), it was not fair and reasonable to void the policy 21 months into an ongoing claim based on information that could have been discovered if Lloyds had checked Mr R's details when the claim was submitted. The ombudsman rejected the argument that checking applications at claim stage would be onerous, noting it was unfair for Lloyds to accept and deal with a claim for many months then rely on information they could have discovered to withdraw cover. The fact that Lloyds only discovered the CCJs through another business, not their own initiative, further supported that they would have continued the claim to conclusion without this discovery.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website