Upheld: unfair claim decline and unreasonable cost recovery complaint against Collingwood Insurance Company Ltd

Decision detail

Summary

Ms I complained that Collingwood Insurance declined her motor insurance claim because she was driving without 'L' plates when involved in an accident. Although the ombudsman found the breach material to the loss, Collingwood subsequently attempted to recover the third party's excess and credit hire costs from Ms I under the policy's right of recovery clause. The ombudsman upheld the complaint, finding that while the excess could be recovered, Collingwood failed to evidence that the third party needed credit hire or could not afford cheaper alternatives, as required by court ruling. Collingwood was directed to remove the credit hire costs from what Ms I owes, allowing recovery of only the third party's excess.

The Ombudsman's reasoning

While the breach of the 'L' plates condition was material to the loss (as the third party's different driving behaviour may have been influenced by visible inexperience), Collingwood must ensure recovered costs are fair and reasonable. The GTA limits costs but does not evidence need assessment. Although the third party demonstrated need for a car, Collingwood failed to check whether the third party could afford cheaper hire alternatives, which is a required criterion under court ruling. Therefore, credit hire costs cannot be fairly recovered from Ms I.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website