Alwyn Insurance Company Limited · DRN-6175717

The complaint Mr W complained that Alwyn Insurance Company Limited avoided his motor insurance policy. What happened After Mr W’s car was damaged in an incident and he made a claim under his policy, Alwyn noticed that the named driver on his policy had prior insurance policy cancellations. Alwyn said that Mr W hadn’t told them about that when he took out the policy including the named driver and, if he had, they wouldn’t have insured them at all. Alwyn said that he had made a deliberate misrepresentation to them. As a result they declared his policy as being void from outset. This means that they treated his policy it as if it had never existed. They paid for his claim, but they wanted to recover those costs from him. Mr W said that Alwyn’s decision was opportunistic and unfair and had caused him significant financial hardship because he was liable for the costs arising from the incident, and it would also affect his future insurance premiums. He wanted Alwyn to reinstate the policy, honour the claim, and remove their cancellation of his policy from his record. The investigator did not recommend that his complaint should be upheld. They thought that Alwyn’s decision to avoid the policy for deliberate misrepresentation was not unfair. Mr W didn’t agree and so I was asked to decide. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. The relevant law here is the Consumer Insurance (Disclosure and Representations) Act 2012. As the investigator noted, it says that a consumer needs to take reasonable care not to make a misrepresentation when taking out an insurance policy. If a consumer fails to take reasonable care, and their misrepresentation is a qualifying one, the insurer can take certain actions. So I have looked at whether Mr W did take reasonable care not to make a misrepresentation, whether that misrepresentation was qualifying, and whether Alwyn’s actions then were in line with CIDRA. If a deliberate misrepresentation has been made, under CIDRA Alwyn can avoid the policy, keep the premiums Mr W has paid, and recover from Mr W what money they have paid out in a claim. As the investigator explained, our role is not to decide whether the misrepresentation was deliberate/reckless or careless, but instead to decide whether Alwyn fairly investigated, and decided about, that matter. Reasonable care Alwyn said Mr W didn’t take reasonable care in that he didn’t disclose the named driver’s prior cancellations, and he had also failed to inform Alwyn that his policy documents were therefore incorrect.

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It’s not in dispute that the named driver did have prior policy cancellations, and Alwyn have provided evidence of that. The detail of these is known to the parties and has been covered so I won’t repeat it here. I’ve looked at the question Mr W was asked via the online insurance comparison site. It said: “Has an insurance provider ever declined, cancelled or voided their policy or imposed special terms?” This is followed by a drop-down heading. It provides more information about cancelled policies. It also links to a “policy cancellation” help page. A drop-down box also says: “Why are we asking? Insurance providers may cancel or void a policy if anyone named on it has provided the wrong details or missed out anything important needed to meet the policy requirements.” Mr W said he found the online form unclear. However I think the question asked of Mr W was clear and specific. And Alwyn have shown us their underwriting criteria that confirm they wouldn’t have insured at all if he’d answered the question correctly and declared the named driver’s cancellations. Whether they will insure or not is a commercial decision for Alwyn to decide. So I’m satisfied that this misrepresentation was a qualifying one. Alwyn said the qualifying misrepresentation was deliberate. The named driver was Mr W’s spouse. Mr W said that Alwyn had wrongly attributed her prior policy cancellations to him, because they related to a policy and car that wasn’t his. He said that his spouse having prior cancellations was information that wasn’t his to declare and so wasn’t evidence of his misrepresentation and should not be used to penalise him. But the question asked of Mr W refers to anyone named on the policy, and so I think it’s clear that would include a named driver too and so Mr W should disclose a named driver’s cancellations. Alwyn were not attributing her cancellations to him, they were looking at what Mr W had disclosed about the named driver, a person they were potentially insuring. Whether a potential insured has had cancellations is fundamental to an insurer deciding to insure. I think that Mr W should have known that prior cancellations had to be disclosed. So I think that he should have been expected to know that he should answer the question about cancellations correctly. Alwyn asked that specific question to obtain the information they needed in order to decide whether or not to insure. Mr W said he’d been unaware of the named driver’s prior cancellations. However, the named driver was Alwyn’s spouse, and so it was unlikely that he wouldn't have known about the cancellations. But even if he had not in fact known, it was his responsibility to ask her before he answered the question. So I think that Mr W knew that the matter to which the misrepresentation related was relevant to Alwyn, and either it was deliberate, or was at least reckless, because he answered it without asking the named driver. He also said Alwyn didn’t make him aware that the policy would be invalid due to the named driver’s prior cancellations or give him a chance to amend that information. However Mr W’s policy documents include the motor proposal which lists the questions asked of Mr W, and the answers he provided. It says:

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“Section 5B Insurance History – have you or any of the additional drivers… had a policy cancelled, made void, renewal refused, proposal declined or had any special conditions applied? The answer he had provided there was “No”. The proposal also said at the top in bold: “You should also ensure that the information you have provided in this statement is accurate. If it is incorrect in any way please tell your intermediary immediately. Failure to supply accurate and complete answers mean your policy is invalid and that it does not operate in the event of a claim.” So it gave clear warning that, if it wasn’t correct, Alwyn might avoid the policy. It was Mr W’s responsibility to check that and inform if anything in them was incorrect. If Mr W had read the proposal confirmations, as we expect of consumers, and acted on that warning, Alwyn wouldn’t have insured Mr W at all, and would not have incurred claim costs. Mr W also thought it unfair that the business didn't check for prior cancellations at the point of sale but waited until he made a claim under the policy. But it’s an insured’s responsibility to provide correct information and take reasonable care not to make a misrepresentation. Alwyn had made clear to Mr W what information they required from him before deciding whether to insure, and they were entitled to rely on the information he gave them without having to check that at the time. And as I’ve shown above, Alwyn did also give the chance to tell them if the information he’d given them was incorrect. He said he bought the policy in good faith, paid all premiums on time, and had done everything reasonably expected of a policyholder and that this was inconsistent with Alwyn’s suggestion of deliberate or reckless behaviour. But I have to look here at this specific issue of misrepresentation. It was his responsibility to disclose the information Alwyn required and Alwyn gave Mr W a clear warning that his policy’s validity depended on the truth and completeness of the information he gave them. Alwyn said that even if Mr W didn’t set out to mislead Alwyn, that did not make a difference. Mr W did not take reasonable care not to make a misrepresentation when he did not disclose the cancellations and this was a deliberate, or at the least reckless, misrepresentation. Alwyn have provided enough information to show me that they fairly and reasonably investigated and decided on this matter. A deliberate or reckless misrepresentation is a qualifying one for CIDRA, and it entitles Alwyn to avoid the policy as they have shown that they wouldn’t have offered cover at all without the misrepresentation. This means that Alwyn can treat it as if it didn’t exist from the start and can recover claim costs they have paid out. I appreciate what Mr W says about the financial impact on him, and I do see that is unfortunate. I realise that this decision is likely to be disappointing for Mr W. But in these circumstances, I don’t think that Alwyn have acted unfairly and so I don’t ask them to do anything else. My final decision For the reasons given above, it’s my final decision that I don’t uphold the complaint.

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Under the rules of the Financial Ombudsman Service, I’m required to ask Mr W to accept or reject my decision before 28 April 2026. Rosslyn Scott Ombudsman

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