Tesco Underwriting Limited · DRN-6224023

The complaint Mrs H complains that Tesco Underwriting Limited (Tesco) cancelled her motor insurance policy and refused to pay her claim. What happened Mrs H took out a motor insurance policy with Tesco. During the term of her policy she changed her car and updated Tesco of this through its online portal. When her car was stolen, she tried to make a claim. Tesco said when she provided the details of the new car she’d provided incorrect details about the registered owner. And it considered this to be a careless qualifying misrepresentation, which entitled it to cancel the policy and request payment of the policy premiums because she had made a claim. Mrs H brought her complaint to us and our investigator thought it should be upheld. They agreed there had been a qualifying misrepresentation and they believed it was careless They thought Tesco were entitled to avoid Mrs H’s policy and decline her claim, but it should return the premiums she’d paid to her. Tesco doesn’t agree with the investigator and has asked for an ombudsman’s decision. Tesco confirmed it had classified this as a careless unacceptable misrepresentation and had cancelled her policy. It said it expected the claim to proceed and if a claim was made the full premium is owed. Soon after cancelling her policy, it declined to settle her claim because it was not covered under the terms of her contract of insurance due to the car being registered as an asset of a limited company in her husband’s name. It said it only offers private car insurance policies and wouldn’t have offered cover if she had provided the correct information. Mrs H didn’t respond to the investigator’s view. 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. 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.

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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. Tesco thinks Mrs H failed to take reasonable care not to make a misrepresentation when she changed her car during the term of cover. She provided details of the new car but didn’t update the owner. I looked at the questions asked on Tesco’s online portal when a mid-term change of vehicle is made. I saw it asks for registration details of the new car, then asks; Who is the owner of the car? There were then a number of options provided. Mrs H said she was the owner and registered keeper of her previous car and explained the car had been gifted to her by her husband so she just changed the car and nothing else. The change of car was recorded as you/your husband or wife/civil partner/partner owns the car and the updated policy was offered by Tesco based on this information. However when she made a claim after the new car was stolen, it was found the car was owned by her husband’s limited company. I think Mrs H failed to take reasonable care not to make a misrepresentation when she said the car was owned by herself/husband. Tesco has provided evidence by way of its underwriting criteria that if Mrs H had told it the car was owned by a limited company it would not have been able to continue offering her insurance. This means I’m satisfied Mrs H’s misrepresentation was a qualifying one. Tesco has said Mrs H’s misrepresentation was careless. I agree Mrs H’s misrepresentation was careless because as she only used the car for domestic purposes and it had been gifted to her by her husband she had not considered it was owned by his company and that this would have a commercial impact on any motor insurance cover. As I’m satisfied Mrs H’s misrepresentation should be treated as careless I’ve looked at the actions Tesco can take in accordance with CIDRA. As Tesco would not have offered cover it can • Avoid the policy for a careless misrepresentation. They can avoid the policy from the point of misrepresentation. In this case this is from the date the car was changed on 3 March 2025. • Return any unused premiums the consumer paid. • Treat the policy as though it never existed from the point of avoidance and not deal with any claims. • The insurer may also look to recover any cost’s it’s paid to a third party on any claim after the misrepresentation. In this case Tesco gave Mrs H seven days’ notice of policy cancellation on 26 August 2025 and then cancelled her policy. It requested she paid the full term of policy premiums because a claim had been made. However it then declined to settle her claim due to the misrepresentation. I don’t agree with the actions Tesco has taken because they are not in line with the remedies detailed in CIDRA based on how the misrepresentation has been classified. As CIDRA

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reflects our long-established approach to misrepresentation cases, I think avoiding Mrs H’s policy rather than cancelling it produces the fair and reasonable outcome in this complaint. And because I’m satisfied Tesco was entitled to avoid Mrs H’s policy in accordance with CIDRA this means that – in effect – her policy didn’t exist after 3 March 2025, it does not have to deal with her claim following the theft of her car. However it should return any unused premiums the consumer paid from the date of the qualifying misrepresentation. I saw after Mrs H brought her complaint to our service Tesco paid her £100 compensation for the delay in sending written confirmation of its decision to decline her claim. I have not seen evidence of a final response being sent to Mrs H from Tesco in reference to her complaint about its decision to decline her claim, cancel her policy and require payment of her policy premiums to date of cancellation. Although I understand Mrs H will be disappointed her claim will not be paid, I uphold her complaint. Putting things right I think the fair and reasonable outcome is for Tesco to; • Record the policy as avoided on the date of misrepresentation of 3 March 2025, not cancelled on 15 July 2025. • Reimburse unused policy premiums, from 3 March 2025. Pay 8% simple interest on this amount from the date it recorded the policy cancellation until the date paid to her. • Pay Mrs H £100 compensation for the distress and inconvenience caused in dealing with the misrepresentation. My final decision For the reasons set out above, I’ve decided to uphold Mrs H’s complaint. I require Tesco Underwriting Limited to; • Record Mrs H’s policy as avoided on the date of misrepresentation. • Reimburse unused policy premiums to Mrs H, from 3 March 2025. Pay 8% simple interest on this amount from the date it recorded the policy cancellation until the date paid to her. • Pay Mrs H £100 compensation for the distress and inconvenience caused. Under the rules of the Financial Ombudsman Service, I’m required to ask Mrs H to accept or reject my decision before 26 May 2026. Sally-Ann Harding Ombudsman

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