Not upheld: Motor insurance, claim handling complaint against First Central Underwriting Limited

Decision detail

Summary

Mr L purchased car insurance from First Central and subsequently made a claim following an incident. First Central discovered through an engineer's inspection that the car had multiple modifications including a performance induction kit, engine remapping, and exhaust changes, which Mr L had not disclosed when answering the policy question about modifications. Mr L claimed he was unaware of the modifications and thought they were standard for the sports model. The ombudsman found that Mr L failed to take reasonable care as the modification question was clear with detailed guidance, and the non-manufacturer labelled parts would have alerted any reasonable consumer. First Central provided underwriting evidence it would not have offered the policy if aware of the modifications, making it a qualifying misrepresentation. The complaint was not upheld as First Central was entitled to avoid the policy under the Consumer Insurance (Disclosure and Representations) Act 2012.

The Ombudsman's reasoning

The ombudsman applied the Consumer Insurance (Disclosure and Representations) Act 2012 (CIDRA), which requires consumers to take reasonable care not to misrepresent facts when taking out insurance. The question about modifications was clear with detailed guidance and examples. Mr L failed to take reasonable care by not asking the seller about modifications, not researching the specific car model, and not noticing the non-manufacturer labelled parts which would have alerted any reasonable consumer to modifications. The misrepresentation was qualifying because First Central provided underwriting evidence it would not have offered the policy had it known about the modifications. First Central's classification of the misrepresentation as careless (rather than deliberate/reckless) was reasonable and more favourable to Mr L, and the pro rata refund was appropriate.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website