Upheld: wrongful policy avoidance based on alleged non-disclosure; misapplication of CIDRA qualifying misrepresentation test complaint against Lloyds Bank General Insurance Limited
Financial Ombudsman decision DRN-6422164 of 2026-06-11T00:00:00+00:00. wrongful policy avoidance based on alleged non-disclosure; misapplication of CIDRA qualifying misrepresentation test complaint against Lloyds Bank General Insurance Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-6422164 |
|---|---|
| Decision date | 2026-06-11T00:00:00+00:00 |
| Firm | Lloyds Bank General Insurance Limited |
| Product | Home insurance |
| Claim type | wrongful policy avoidance based on alleged non-disclosure; misapplication of CIDRA qualifying misrepresentation test |
| Outcome | Upheld |
| Remedy | 1. Remove avoidance marker from internal and external databases and provide letter confirming avoidance was in error. 2. Settle the claim in line with policy terms, deducting refunded premiums from settlement. 3. Reimburse £194.99 awning cost plus 8% simple interest from date paid until settlement, with tax deduction certificate if required. 4. Pay £500 compensation for distress and inconvenience caused by the avoidance and delay in home repairs. |
Summary
Ms B and Mr M purchased home insurance from Lloyds in July 2024 and claimed for storm damage in January 2025. Lloyds avoided the policy, claiming Ms B failed to disclose that a shepherd's hut on her property was used as a holiday let business. The ombudsman found that Ms B took reasonable care and did not make a qualifying misrepresentation under CIDRA because the policy questions used unclear terminology without proper definition, and Ms B had separately insured the shepherd's hut commercially, reasonably believing it was a separate entity. The ombudsman upheld the complaint, directing Lloyds to settle the claim, remove the avoidance marker, provide a letter confirming the avoidance was in error, reimburse the awning cost with interest, and pay £500 compensation for distress and inconvenience.
The Ombudsman's reasoning
Under CIDRA, a qualifying misrepresentation requires both that the consumer failed to take reasonable care and that the insurer would not have entered into the contract without the misrepresentation. The test for reasonable care is assessed against the standard of a 'reasonable consumer'. Ms B took reasonable care because: (1) the policy questions used unclear, interchangeable terminology without definition at point of sale; (2) the definition of 'home' was buried in a 40-page policy document, not highlighted at purchase; (3) Ms B had taken separate commercial insurance for the shepherd's hut, demonstrating she believed it was a separate entity; (4) the shepherd's hut had separate council rates and property reference; (5) even Lloyds required legal consultation to interpret the title deed, suggesting a reasonable consumer would have interpreted it as Ms B did; (6) consumers are not generally expected to review title deeds before purchasing standard home insurance. Therefore, there was no qualifying misrepresentation and Lloyds was not entitled to avoid the policy.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Lloyds Bank General Insurance Limited, all decisions | 1,332 | 25% |
| Home insurance, all decisions | 20,668 | 38% |
Source
Read the original decision on the Financial Ombudsman Service website