Marshmallow Insurance Limited · DRN-6321690

The complaint Mr L complained about Marshmallow Insurance Limited’s (“Marshmallow”) claim handling and its decline of his theft claim when his car was stolen, under his motor insurance policy. What happened Mr L’s car was stolen on 6 July 2025. He made a claim to Marshmallow that it initially accepted. A settlement payment was offered. Mr L was in the process of disputing the amount, when his car was recovered by the police. He said the business wanted to inspect the car and there was a delay in arranging this. It then declined his claim and cancelled his policy. Mr L said this was because Marshmallow thought he’d failed to safeguard his vehicle. He didn’t accept this outcome and complained. Marshmallow responded to Mr L’s complaint in September 2025, which it partially upheld. It offered £150 compensation for communication shortfalls. In a later response on 17 October the business said that Mr L hadn’t safeguarded one of the vehicle’s keys. This had allowed the thieves to take his car. So, it was declining the claim on this basis. For clarity, Marshmallow’s later letter wasn’t a final complaint response under the Financial Conduct Authority’s (“FCA”) dispute resolution or DISP rules. These rules determine what complaints we’re able to consider. The October 2025 letter didn’t provide referral rights to our service. But the records show Mr L did complain about the decline decision. He also complained about the cancellation of his policy in an email dated 31 October. The DISP rules allow the business up to eight weeks to provide a complaint response. As it didn’t provide a response in that time frame our service is able to consider both issues. Mr L didn’t accept Marshmallow’s response and referred the matter to our service. Our investigator didn’t uphold his complaint. She thought the evidence and expert opinion showed the car had most probably been stolen by someone with access to an original key. She also thought £150 compensation for the communication issues was fair. Mr L didn’t think Marshmallow had treated him fairly and he didn’t accept our investigator’s findings. So, he asked for an ombudsman to consider his complaint. It 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. Having done so I’m not upholding Mr L’s complaint. I’m sorry to disappoint him but I’ll explain why I think my decision is fair. Mr L’s policy terms say: “Looking after your vehicle

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You or any permitted drivers are required to maintain the insured vehicle in a roadworthy condition. You or any person in charge of the insured vehicle are required to take all reasonable care to safeguard it and its contents from loss or damage, for example the vehicle should not be left unlocked.” This is a common term used in motor insurance policies. We don’t think that this is inherently unfair. Marshmallow said Mr L’s car had likely been taken using one of the keys. If this is the case, then this would indicate that he hadn’t taken “all reasonable care to safeguard” his vehicle. I’ve thought carefully about the reasoning Marshmallow relied upon when declining Mr L’s claim. I’ve seen the claim records that indicate the car was locked when it was found by the police. Photos were taken from the exterior of the car. These indicate it could not be opened. The engineer that inspected Mr L’s car said: “this vehicle isn't keyless, so it would need a key to start it, ‘a device’ would not be able to start the car and also disable the steering lock.” An email Marshmallow received from a vehicle system forensics specialist said: “The expected theft method for this vehicle would be programming a new key or having a cloned key (this would require access to both the vehicle and keys)” Based on this information it would not be possible to steal Mr L’s car without a key. The engineer confirmed there were no signs of it being broken into. The car was found to be locked, and with no damage to indicate that access was forced. I can see that this view is supported by the photos taken when the car was recovered. I acknowledge Mr L’s comments that various methods can be used by car thieves. But he hasn’t shown how one of these methods could have been used here. Marshmallow’s experts confirm that Mr L’s car isn’t susceptible to relay-theft. This is a common method where a device is used to trick the car’s computer into thinking the key is close by. A device is used to capture and transmit the signal from a genuine key. This allows the thieves to unlock the car without the alarm activating and start the ignition. But this method of theft wasn’t possible with Mr L’s car. The expert opinion confirmed that a key was required to start the car and disable the steering lock. Mr L provided Marshmallow with CCTV footage from several cameras from neighbouring houses. I’ve watched this footage carefully. The thieves can be seen driving to different locations on Mr L’s estate looking at cars. In one of the videos the thieves van can be seen driving off with another car close behind. Mr L confirmed this was his car being driven by one of the thieves. Another clip shows another car driving in the same direction shortly afterwards. Mr L said this was him driving after the thieves in another car. But he didn’t manage to catch them. Neither of these video clips is useful in identifying how the car was taken. Mr L said he was alerted to the theft when his car alarm was activated. There is no direct footage of the thieves getting into his car. So, I can’t ascertain if the alarm was going off or see how access was gained to the car. But we do know there was no damage found when it was recovered. Similarly, the car was found to be locked, which indicates that the thieves had a key. When he reported the theft, the records show that Mr L told Marshmallow he had two keys. He later confirmed that he only had one key. He said the other key was lost in 2018 during a

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house move. However, Mr L did initially confirm that he had two keys, which shows that he wasn’t aware the spare key was lost, until he tried to find it. Based on this evidence I’m more persuaded by the expert opinion provided by Marshmallow that the thieves had access to a key. This is because there is no damage to the car to indicate a forced entry, the car was locked when found, and the car isn’t susceptible to relay theft. Additionally, the location of the spare key isn’t known. Mr L said this was lost when moving house but when initially making his claim he said he had two keys. So, it can’t be known with certainty that this is when the key was lost. In these circumstances I don’t think Marshmallow behaved unreasonably when it declined Mr L’s claim for the reasons it gave. I’ve thought about Mr L’s view that Marshmallow cancelled his policy unfairly. His policy terms allow the business to cancel the policy where there is a valid reason for doing so. One of these reasons is: “Your failure to comply with any of the General conditions or General exclusions set out by this policy.” As discussed, Mr L was required to take all reasonable steps to safeguard his vehicle. I don’t think Marshmallow acted unreasonably when it decided he hadn’t done so, for the reasons already mentioned. This meant the business was able to cancel Mr L’s policy under the terms and conditions he’d agreed. Having considered all of this I don’t think Marshmallow acted unfairly when it relied on its policy terms to decline Mr L’s claim and cancelled his cover. So, I can’t reasonably ask it to do anymore. My final decision My final decision is that I do not uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr L to accept or reject my decision before 26 May 2026. Mike Waldron Ombudsman

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