Not upheld: Travel / life insurance claim disputes complaint against Wakam UK Limited trading as Wakam

Decision detail

Summary

Mr and Mrs S complained that Wakam unfairly cancelled their home insurance policy after they made a claim for water damage, citing careless misrepresentation of the rebuilding cost. The policy had been declared with a rebuilding cost of £441,000 based on the BCIS calculator, but Wakam's investigation revealed the actual cost exceeded £1,000,000. Although Wakam subsequently reinstated the policy and offered £750 compensation, Mr and Mrs S sought an ombudsman's decision arguing the cancellation was unfair and requesting higher compensation. The ombudsman found that Mr and Mrs S failed to take reasonable care when accepting the BCIS figure without further verification, given that the property purchase price (£995,000) and subsequent renovations (£160,000) made the declared cost unreasonably low. Under CIDRA, this constituted a careless qualifying misrepresentation, and since the actual cost exceeded Wakam's maximum cover of £700,000, the insurer was entitled to cancel. The complaint was not upheld, though the ombudsman noted Wakam had already taken most remedial steps that would have been required if the complaint had succeeded.

The Ombudsman's reasoning

The ombudsman applied the Consumer Insurance (Disclosure and Representations) Act 2012 (CIDRA) and found that Mr and Mrs S made a careless qualifying misrepresentation regarding the rebuilding cost. Although the BCIS calculator generated £441,000, it was unreasonable for them to accept this figure without further checks given that the property purchase price was £995,000 plus £160,000 in renovations. The guidance on the price comparison site made clear the calculator was a guide only and that customers should obtain professional advice for properties with special features. The ombudsman found that a reasonable consumer with knowledge of the property's actual costs would have questioned whether £441,000 was adequate. Under CIDRA, where a careless qualifying misrepresentation would have resulted in the insurer not offering cover at all, cancellation is a permitted remedy. Since Wakam's maximum cover was £700,000 and the actual rebuilding cost exceeded this, the policy would not have been offered even if reasonable care had been taken. The ombudsman rejected Mr and Mrs S's argument that a hypothetical rebuild cost of £665,000 in March 2024 could be inferred from the September 2025 estimate, finding insufficient evidence to support such a calculation. The ombudsman noted that Wakam had already reinstated the policy and offered £750 compensation, which addressed most of what would have been required if the complaint had been upheld.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website