Principal Insurance Limited · DRN-6260151

The complaint Mr and Mrs B complains that Principal Insurance Limited (Principal) mis-sold her a motor insurance policy. What happened In November 2024, Mr and Mrs B took out a motor insurance policy with an insurer through Principal. Mrs B was the policyholder and Mr B was a named driver. As Mrs B was the policyholder, and for ease, I’ve referred to her throughout. In January 2025, Mrs B bought an additional car and asked Principal to switch her existing policy mid-term from the previous car to the new car but to downgrade its level of cover to ‘third party only’. Mrs B has explained this was because it was too expensive to insure the new car with a ‘comprehensive’ level of cover. She then took out a separate policy for the previous car which was also on a ‘third party only’ level of cover. In July 2025, Mrs B’s new car was unfortunately stolen. She claimed on her policy but the insurer declined it as she had purchased ‘third party only’ cover. Mrs B complained that Principal mis-sold her the policy. She said there had been a miscommunication over the terms 'third party' and 'third party only.' She said when she called and asked for ‘third party’ cover she assumed it would be ‘third party, fire and theft.’ And that she wasn’t aware ‘third party, fire and theft’ and ‘third party only’ were different levels of cover. Principal didn’t uphold Mrs B’s complaint. It said that it was clear in the call and in the paperwork that Mrs B was insuring the new car on a ‘third party only’ basis. Unhappy with Principal’s response, Mrs B brought her complaint to our Service. Our Investigator didn’t think the policy had been mis-sold. Mrs B disagreed. As the complaint couldn’t be resolved, it has been passed to me for a decision. 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’ve decided to not uphold this complaint and I’ll explain why. I’m aware I’ve set out the background to this complaint in less detail than the parties have presented it. I’m not going to respond to every single point raised. Instead, I’ve focused on what I find are the key issues here. I assure both parties, however, that I’ve read and considered everything they’ve provided. It’s important I set out that as part of this complaint, I’m not considering the insurer’s decision to decline the claim. That complaint would need to be looked at against the insurer. Principal, as a broker, is regulated to sell insurance products. The sale of Mrs B’s insurance was done on a non-advised basis. That means Principal didn’t have to ensure the policy met Mrs B’s needs, but it did need to provide clear, fair and not misleading information to enable her to decide whether the policy would be suitable.

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I do not doubt Mrs B’s testimony in relation to the level of cover she intended to buy when she called up Principal. But in order for me to uphold her complaint, I would have to be satisfied Principal made a mistake and I don’t think it has here. I say this because I’ve listened to the call between Mrs B and Principal when she changed the car on her existing policy. She explained she had a new car she’d like to obtain a quote for. She said: “I'd like third party, and I'd like to transfer the policy we have into this new car”. The agent came back with “so third party only, no excess, additional premium £425.91”. I don’t think there is anything in the call to indicate that Mrs B didn’t understand the level of cover she wanted for her new car. So, the agent wouldn’t have known they needed to go into any more detail on the call and I would only expect the agent to go into more detail than they did if they’d been made aware that Mrs B was unsure about the level of cover she wanted. I therefore can’t see that Principal had any indication it wasn’t doing what Mrs B wanted. Mrs B has confirmed she received two lots of insurance paperwork in January 2025 – one for the previous car which included an Insurance Product Information Document (IPID) and the other was for the new car which included the certificate of insurance, the policy schedule and the statement of fact but no IPID. She’s said that without the IPID, she couldn’t have known the exact level of cover she had purchased for the new car. However, the IPID is a short summary document containing the key information about a policy in a format standardised throughout the insurance market. It doesn’t include information specific to an individual consumer – like the policy schedule – but it gives a simple overview of the product. Mrs B has confirmed she received the IPID for her previous car which was also insured on a ‘third party only’ basis. So, whilst Mrs B wasn’t provided with an IPID for the new car, she was provided with one for her previous car which was insured for the same level of cover. I’ve looked at the IPID Mrs B was provided with and I’m satisfied that it clearly outlines all three types of car insurance – ‘comprehensive’ cover, ‘third party, fire and theft’ cover and ‘third party only’ cover. It makes clear that the ‘third party only’ cover provides insurance for injury to others and damage to other people’s property or cars caused by the insured. And that it doesn’t cover any damage or loss to the insured’s own car. I have also looked at the documents Mrs B received and I’m satisfied these made clear that she had purchased ‘third party only’ cover for her new car. Considering this, I think Principal gave Mrs B enough information at the point of sale to decide if she was happy with the policy. I recognise how upsetting it must have been for Mrs B to learn the theft of her car wasn’t covered under the policy. But I can’t hold Principal responsible for this as I’m satisfied it followed her instructions on the call when it insured her new car under the existing policy. As I think Principal acted fairly, I won’t direct it to do anything further. My final decision For all of the above reasons, I’m not upholding this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mrs B and Mr B to accept or reject my decision before 26 May 2026. Linda Tare

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Ombudsman

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