Watford Insurance Company Europe Limited · DRN-6196627

The complaint Mr N complains that Watford Insurance Company Europe Limited declined his claim made on his motor insurance policy following the theft of his car. What happened Mr N advertised his car for sale, and a potential buyer took it for a test drive. After this, the buyer took the car’s keys and V5 whilst Mr N was distracted. He said he had transferred the money and flashed a “confirmation” at Mr N before unlocking the car and driving off. Mr N said no payment was received and he was unable to make contact with the thief using the details provided. The thief was later convicted of similar offences. Watford declined the claim because theft by deception by someone claiming to be a buyer was excluded from cover. Our Investigator didn’t recommend that the complaint should be upheld. He thought Watford had declined the claim fairly and reasonably as it had relied on the policy exclusion that was clearly stated. Mr N asked for an Ombudsman’s review, so his complaint has come to me for a final decision. He said the claim had been unfairly declined because the thief wasn’t a potential buyer. He said he hadn’t left the car’s keys unattended. 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. Mr N has told us about the severe effects this experience has had on him and his family and their finances. And I was very sorry to hear about this. I can understand that the repudiation of his claim has added to this distress. Our approach in cases like this is to consider whether the insurer acted in line with the terms and conditions of the policy and fairly and reasonably. I can see that Section 1 of Mr N’s policy covers loss or damage to the insured vehicle, and among the exceptions to cover it clearly excludes: “Loss of or damage to Your Car where possession of it is gained by deception by someone who claims to be a buyer, agent or service provider.” I think this is a common exclusion in motor insurance policies. And I would expect it to be clearly set out in the policy document, which it is, and also in the summary so that it’s drawn to consumers’ attention. And I can see that the Insurance Policy Information Document (IPID) contains the following under "What is not insured?": “Loss or damage to your car through deception by someone who claims to be a buyer.” So I think the policy exclusion is clear and is sufficiently drawn to the consumer’s attention for Watford to rely upon it to decline a claim. But our approach is that this is usually only fair and reasonable if the consumer hasn’t taken reasonable steps to safeguard the insured vehicle.

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Mr N has provided an account of what happened. He said he took the thief for a test drive, and he was told he was a police officer. They returned to Mr N’s home and Mr N placed the car’s key and V5 on a table. Mr N said he was distracted by his child. And the thief took his car’s key and V5 and said he had transferred the money. He showed Mr N a confirmation and drove off. When no money appeared, Mr N called the thief who said he’d contact his bank. But he then blocked Mr N’s calls. Mr N said the thief wasn’t a potential buyer and so the policy exclusion didn’t apply. But I disagree. This is because Mr N had advertised his car for sale. He was clearly expecting money in exchange for his car. And he later called the thief when the money didn’t appear in his account. He didn’t immediately contact the police when the car was taken. Therefore, I’m satisfied from Mr N’s own account that the thief posed as a potential buyer. I’ve then thought about what steps Mr N took to safeguard his car. I’ve considered whether Mr N took reasonable steps to check he was dealing with a genuine buyer before he handed over control of the car. We’d think it reasonable if for example, the seller checked the customer was who they said they were and was entitled to drive the car by checking their driving licence before letting them drive it. And did they check he was legally insured to drive it by checking insurance documents before letting them drive the car? We think these steps are likely to deter potential thieves. From Mr N’s account, I can’t see that he checked the thief’s driving licence to confirm his identity. And he didn’t ask questions about the thief’s insurance which would enable him to drive the car legally. We also consider the circumstances of the theft. Mr N said he hadn’t left his keys unattended. From his account, they were placed on a table with the V5. Mr N said he was then distracted by his child, and the thief took the opportunity to pick them up. He then flashed confirmation of a transfer of money to Mr N and left to drive off in the car. We think that if the consumer was distracted, and the thief took possession of the key while this distraction was taking place, we’re likely to say it’s unfair for the insurer to rely on the theft by deception term. This is because the consumer didn’t voluntarily hand over control of the key. But I can’t see from his account that Mr N tried to recover his keys and V5. He first mentioned being distracted some months after the theft. In earlier accounts, he said the thief had taken the keys and showed the transfer on his phone app and then left. And I think it’s reasonable to rely on the earlier accounts as they are closer to the event. Also, I can’t see that Mr N called the thief back to confirm that the transfer of money had taken place. I think Mr N should have made sure the money was received at his own bank before allowing the thief to drive away. So although I acknowledge that Mr N may not have voluntarily handed over control of the car’s key, I’m not satisfied that he did enough to safeguard his car by checking the thief’s identity and confirming the transfer had occurred. So I think Mr N didn’t take reasonable steps to keep his car safe and it was fair for Watford to apply the policy exclusion to decline his claim. My final decision For the reasons 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 Mr N to accept or reject my decision before 25 May 2026.

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Phillip Berechree Ombudsman

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