Not upheld: breach of duty of fair presentation; policy avoidance; non-disclosure of material facts complaint against Covea Insurance Plc

Decision detail

Summary

Mr P, a sole trader, complained that Covea Insurance Plc unfairly voided his commercial 'Retail and Salons' insurance policy and declined to cover an escape of water claim. Covea discovered during investigation of a separate claim that Mr P had County Court Judgments registered against him at the time he took out the policy in March 2021, which he had failed to disclose despite being prompted to do so. Mr P claimed he was unaware of the CCJs as he believed he had a payment plan with his water board. The Ombudsman found that Mr P ought reasonably to have been aware of the CCJs, particularly given a substantial £4,000 payment made in January 2020 following bailiff enforcement action, and should have made enquiries before confirming the statement of fact. This constituted a qualifying breach of the duty of fair presentation under the Insurance Act 2015, and Covea's evidence showed they would not have provided cover if aware of the CCJs. Therefore, the Ombudsman upheld Covea's decision to avoid the policy from inception while returning premiums, finding this to be fair and reasonable.

The Ombudsman's reasoning

The Ombudsman found that CCJs are material circumstances under the Insurance Act 2015 that a prudent insurer would consider relevant. Although Mr P claimed he was unaware of the CCJs, the Ombudsman concluded that Mr P ought reasonably to have been aware of them given the substantial £4,000 payment made in January 2020 following enforcement action in a long-running dispute. This should have prompted Mr P to make enquiries about whether formal judgments had been entered before confirming the statement of fact. The failure to disclose constituted a qualifying breach of the duty of fair presentation, and Covea's evidence demonstrated they would not have provided cover if aware of the CCJs. Therefore, Covea was entitled to avoid the policy and refuse all claims while returning premiums, which is the appropriate remedy under the Act for a non-deliberate or reckless qualifying breach.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website