Partially upheld: claim decline decision and claim handling delay complaint against Tradex Insurance Company PLC

Decision detail

Summary

Mr H purchased a vehicle in December 2020 and later placed it under a finance agreement in his son's name in May 2022 to obtain preferential rates. When the vehicle was stolen in March 2025, Tradex declined the claim on the basis that Mr H lacked insurable interest, as the finance agreement was in his son's name and the finance provider retained legal ownership. The ombudsman found the claim decline reasonable because the policy required the policyholder to have insurable interest, which Mr H did not possess given the finance arrangement. However, the ombudsman upheld the complaint partially due to Tradex's avoidable delay in notifying Mr H of the claim decision and directed compensation of £125 for this service failure.

The Ombudsman's reasoning

For a valid insurance contract, the policyholder must have insurable interest in the item insured, meaning they would suffer the loss. The policy terms covered vehicles owned, leased, or on hire purchase to the policyholder or specified family members. Although Mr H purchased the vehicle and it was registered in his name, the finance agreement was in Mr A's name and the finance provider retained legal ownership until all payments were made. The lack of written evidence of the cash purchase, combined with the clear terms of the finance agreement requiring the vehicle to remain with Mr A, meant Mr H did not have insurable interest at the time of the claim. The main financial interest was held by the finance provider and Mr A. While Tradex delayed in communicating the claim decision, the £125 compensation offered was reasonable for this service failure.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website