First Central Underwriting Limited · DRN-6204945

The complaint Miss B has complained about First Central Underwriting Limited’s decision to cancel her car insurance policy. First Central says Miss B failed to declare modifications to her car. What happened Miss B bought a car insurance policy with First Central in September 2025. She was involved in an incident with another vehicle in September 2025 and made a claim to First Central. First Central discovered that Miss B’s car had been modified. It told Miss B the modification meant if Miss B had declared it when she applied for the policy, First Central wouldn’t have offered her a policy. First Central didn’t avoid the policy (treat it as if never existed). Instead it said it would cancel the policy for careless misrepresentation. But it would deal with the claim. As a claim had been made under the policy – and the claim was an open claim – First Central said Miss B owed the full year’s premium. First Central said Miss B would need to declare a cancellation by an insurer when applying for a car insurance policy in future. Miss B complained to First Central. She said she didn’t know about the modification. She wanted First Central to remove a marker for the cancellation. First Central didn’t uphold Miss B’s complaint. So she brought her complaint to us. One of our Investigators didn’t recommend the complaint should be upheld. Miss B wants an ombudsman to decide. In summary she says she asked open ended questions of the seller, but they didn’t tell her the car had been modified. The modification wasn’t obvious. She disagrees that she carelessly misrepresented the information. Miss B says she answered the modification question based on her reasonable understanding of the vehicle. So the case has been passed to me 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 in this case is The Consumer Insurance (Disclosure and Representations) Act 2012 (CIDRA). This requires consumers to take reasonable care not to make a misrepresentation when taking out a consumer insurance contract (a policy). The standard of care is that of a reasonable consumer.

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And if a consumer fails to do this, the insurer has certain remedies provided the misrepresentation is - what CIDRA describes as - a qualifying misrepresentation. For it to be a qualifying misrepresentation the insurer has to show it would have offered the policy on different terms or not at all if the consumer hadn’t made the misrepresentation. CIDRA sets out a number of considerations for deciding whether the consumer failed to take reasonable care. And the remedy available to the insurer under CIDRA depends on whether the qualifying misrepresentation was deliberate or reckless, or careless. First Central thinks Miss B failed to take reasonable care not to make a misrepresentation when she answered a question it asked about modifications when she applied for the policy. I’ve looked at the question asked of Miss B. It read; “Has the car been modified in any way? Modifications are changes to the car's original specification. These can be mechanical or cosmetic changes inside or outside the car” So I think the question – and the accompanying note – was clear. Miss B’s car had a modified air filter. However, Miss B answered ‘no’ to this question. In a discussion with First Central following the discovery of the modification, Miss B said she hadn’t asked the seller if the car had any modifications. Miss B has provided screenshots of messages she exchanged with the seller before buying the car. She says she asked about the work done to the car and the seller didn’t volunteer that the car had been modified. So Miss B says she didn’t know it had been. The screenshots show that Miss B made enquiries about the car’s MOT history. But it doesn’t show that Miss B asked whether the car had been modified. Miss B referred to the advert in the exchanges with the seller and wrote: “wondering if anything has been done about the advisory as I know in the ad you have said it has had a lot done.” So I think there was an opportunity for Miss B to ask the seller if the car had been modified, as the seller had mentioned significant work done had been done to the car. In line with CIDRA, it is for a customer to take reasonable care. An insurer cannot know if a car has been modified. So I think Miss B failed to take reasonable care when answering this question. First Central has provided this service with evidence to show it would not have offered a policy to Miss B if it had known about the air filter modification. So I’m satisfied that Miss B’s misrepresentation was a qualifying one. First Central has classified the misrepresentation as careless, rather than reckless/deliberate which I agree with. I don’t find that Miss B deliberately intended to misrepresent that her car had been modified. So I’ve looked at the actions First Central can take in light of CIDRA. As a claim had been made, and First Central would not have offered a policy, it could; o avoid the policy for a careless misrepresentation from the start date. o Return any unused premiums the consumer paid.

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o Treat the policy as though it never existed from the point of avoidance and not deal with any claims. o The insurer may also look to recover any costs it’s paid to a third party on any claim after the misrepresentation. However, First Central has acted in a more favourable way for Miss B. It has agreed to cover the claim and instead cancel the policy. As First Central is dealing with a claim under the policy, it is entitled to the full year’s premium. This is standard industry practice as it has indemnified Miss B and met its obligations under the contract. First Central’s policy explained what would happen in the event of incorrect information provided; “The insurers may charge the correct premium, cancel your policy, or make it void from the start date (inception) if you misrepresent or deliberately fail to reveal facts that would affect either the terms and conditions of the policy or the decision to provide insurance. In this case, the insurer may aim to recover any costs they have had to pay and may not return any premium you have paid. You may also be charged cancellation fees under the Intermediary Contract.” And; “If any of the following apply, you may not receive any refund and you may still have to pay the balance of the full yearly premium. This applies in all circumstances no matter what payment method you use: • You have made a claim in the policy year, or a claim has been made against your policy.” I understand Miss B wants First Central to remove a record of an insurer led cancellation from a database insurers use to share information. But I cannot ask First Central to do this – as I find it hasn’t done anything wrong. I think it has treated Miss B fairly. First Central was entitled to avoid the policy and not cover the claim in line with CIDRA. But it has chosen to instead meet the claim and cancel the policy instead. As CIDRA reflects our long-established approach to misrepresentation cases, I think First Central’s actions produce a fair and reasonable outcome to Miss B’s complaint. I’m sorry to disappoint Miss B. But this means I’m not asking First Central to change anything. My final decision For the reasons I’ve given above, my final decision is that I don’t uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Miss B to accept or reject my decision before 25 May 2026. Geraldine Newbold Ombudsman

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