Upheld: Travel / life insurance claim disputes complaint against 1st Central Underwriting Limited
Financial Ombudsman decision DRN-6433666 of 2026-07-02T00:00:00+00:00. Travel / life insurance claim disputes complaint against 1st Central Underwriting Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-6433666 |
|---|---|
| Decision date | 2026-07-02T00:00:00+00:00 |
| Firm | 1st Central Underwriting Limited |
| Product | Motor insurance |
| Claim type | Travel / life insurance claim disputes |
| Outcome | Upheld |
| Remedy | 1st Central must: (1) settle Miss T's original claim proportionately at 99% of costs based on the 1% premium difference; (2) settle the third-party claim in full (and may seek to recover 1% from Miss T at its discretion); (3) refund 99% of Miss T's repair costs (£5,500) and impound costs (£814) plus 8% simple interest per annum from date of payment to date of settlement; (4) pay Miss T £500 compensation for distress and inconvenience (less any £200 already paid); (5) provide tax certificate if HMRC income tax deducted from interest |
Summary
Miss T complained that 1st Central unfairly declined her motor insurance claim and left her liable for third-party costs after an accident while commuting. Miss T had selected 'social, domestic and pleasure use only' when taking out the policy, but actually used the car for commuting. The ombudsman found this constituted a careless misrepresentation under CIDRA. Although 1st Central would have provided cover at a 1% higher premium, it failed to apply the correct proportionate settlement remedy and instead declined the claim entirely. Additionally, 1st Central's agents incorrectly advised that third-party costs would be covered, and the firm failed to communicate promptly or prevent the third-party insurer from pursuing Miss T directly for months. The ombudsman upheld the complaint and ordered 1st Central to settle the claim proportionately (99% of Miss T's costs, 100% of third-party costs), refund Miss T's repair costs with interest, and pay £500 compensation for distress and inconvenience.
The Ombudsman's reasoning
The ombudsman found that Miss T misrepresented her vehicle use under CIDRA by selecting 'social, domestic and pleasure use only' when she actually used the car for commuting. This was a careless misrepresentation, not deliberate. Under CIDRA, where an insurer would have provided cover at a higher premium, it must settle claims proportionately based on the ratio of premium paid to premium that should have been paid. Since Miss T's premium would have been 1% higher with commuting cover, 1st Central should pay 99% of her costs and 100% of third-party costs. Additionally, 1st Central's handling was extremely poor: its agents gave incorrect advice about third-party coverage, it failed to communicate promptly, and it allowed the TPI to continue pursuing Miss T directly despite knowing this caused her distress. The £200 compensation offered was inadequate given the months of ongoing distress and financial uncertainty.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| 1st Central Underwriting Limited, all decisions | 1 | 100% |
| Travel / life insurance claim disputes, all decisions | 21,318 | 31% |
| Motor insurance, all decisions | 24,148 | 35% |
Source
Read the original decision on the Financial Ombudsman Service website