First Central Underwriting Limited · DRN-6215043

The complaint Mr H complains that First Central Underwriting Limited avoided his car insurance policy (i.e. treated it like it never existed) and in turn declined a claim he’d made. What happened In August 2025, another driver hit Mr H’s car while it was parked, and Mr H made a claim on his car insurance policy. First Central sent an engineer to assess the damage, and they reported that the car had several modifications, namely a body kit, a new grille and modified mirrors. First Central said these modifications were not declared at the application stage, and it said that it would not have offered cover for this car if they had known about the modifications at the application stage. As Mr H did not declare these modifications when he took out the policy via a comparison website, First Central considered this to be a careless qualifying misrepresentation, after which they avoided the policy entirely, refunding the full premiums to Mr H. As the policy was avoided back to inception, this meant Mr H did not have cover in place when the incident occurred, so First Central did not consider Mr H’s claim any further. Mr H complained to First Central about this outcome, but they did not uphold his complaint. So he brought his complaint to this Service. Our Investigator gave the opinion that First Central acted fairly and reasonably under the circumstances, in line with the relevant law in place at the time - the Consumer Insurance (Disclosure and Representations) Act 2012 (CIDRA). Mr H disagrees with this view and has asked for an Ombudsman’s decision. Mr H has said that he did not know the car had been modified before purchasing it. To resolve this complaint, Mr H is looking for the policy to be reinstated and his claim considered. What I provisionally decided When considering if First Central acted fairly and reasonably, I must consider the relevant law. In this case, that 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. First Central thinks Mr H failed to take reasonable care when he declared no modifications on his car in the application (which took place online, via a comparison website). They have supplied a screenshot of the question Mr H was asked during the quote process. It says: “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.” First Central have also provided a Statement of Facts which shows that Mr H selected ‘No’ in answer to this question, and Mr H does not dispute this as he says he was not aware that the car was modified at the time. An engineer’s report has also stated that Mr H’s car did have modifications which were outside of the manufacturer’s specification. Therefore, I can conclude that Mr H gave an incorrect answer to this question.

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CIDRA sets out several things to be considered when deciding if a consumer took reasonable care not to make a misrepresentation. One is how specific and clear the questions asked were. The other is any relevant explanatory material. I’m satisfied that the above question is clear and understandable by a reasonable consumer, and I’m further satisfied that it specifically refers to cosmetic changes, such as those seen on Mr H’s car. Additionally, I am satisfied that First Central would not have offered the insurance policy had they known about the car’s modifications at the quote stage, as I have seen evidence to this effect from their underwriting guide. However, I do not believe First Central have demonstrated that this is a qualifying misrepresentation. Mr H has said that he did not know that the car was modified when he bought it. This does not mean a misrepresentation did not take place, but I now need to establish what a reasonable person might have concluded in Mr H’s situation. If a reasonable person conducting a reasonable level of pre-sale research saw this car, would they have concluded that the car had been modified, or would they have believed the car was factory-standard, or had been fitted with one of the manufacturer’s optional extras? To test this standard, I have conducted a nationwide search of advertisement listings for similar vehicles in make, model and mileage to Mr H’s car. This search has revealed two adverts for cars with a similar make, model and variant where the non-standard modifications have been added. I have reviewed both listings in detail, and on neither of them has the body kit been highlighted as a feature at all, much less a modification. In addition, it is not clear and obvious from context that these modifications are non-standard, and given there are other cars for sale with similar specifications, I don’t find it reasonable to state that a reasonable consumer would see such an advert and assume the vehicle was modified. Following this search, I believe that a reasonable consumer would be said to have taken reasonable care if they did not consider these cars to be modified, relying on the information in the advertisements. In the absence of the original listing for Mr H’s car, I am applying this logic to Mr H’s case. I don’t think it’s reasonable for First Central to say that Mr H failed to take reasonable care in his declaration of no modifications at the quote stage. Therefore, I disagree with First Central’s view that Mr H made a qualifying misrepresentation, and as such I am concluding that their decision to avoid his policy was not fair or reasonable. As I have concluded the policy should not have been avoided, this means the policy was in force at the time of the incident, and therefore Mr H had a right to have his claim assessed, though I acknowledge First Central’s point that they would not have insured a modified vehicle. To put things right, First Central should remove any record of Mr H’s policy being cancelled or avoided and effectively reinstate it. They should then assess the claim under the remaining terms and conditions of the policy. Any amount payable as a result of this should be net of the premium refund Mr H received when First Central avoided his policy. Having his policy voided and his claim not assessed will have undoubtedly caused distress and inconvenience for Mr H. For that, First Central should pay Mr H £300 compensation. Mr H responded and accepted my provisional decision. First Central responded and did not agree. In summary they made the following comments in relation to my provisional decision: • The inspection report imagery demonstrates that the car is extensively and obviously

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modified when compared with the standard factory specification. • They disagree with my conclusion that Mr H took reasonable care when selecting ‘no’ to the modification question on the comparison website. • They claim my reference to modified cars being advertised online without explicit mention of modifications creates a precedent where a consumer can automatically be said to have taken reasonable care if a seller fails to disclose modifications, which leaves insurers with the burden of covering cars with a materially different risk profile. They further claim this transfers the burden of disclosure from the consumer to the insurer, based on unrelated third-party marketing practices. • They believe that, because I identified two similar cars to Mr H’s based on their modifications, this supports their position that a reasonable consumer taking reasonable care would similarly be able to identify them as modified. • They have also asked me to consider whether awarding £300 compensation to Mr H is fair and proportionate, on the basis that Mr H swore at and hung up on their staff when he was told his policy was being avoided. 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. I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. I have also carefully considered First Central’s response to my provisional decision. While I note the points First Central has raised, I did consider this prior to issuing my provisional decision and I’m satisfied my provisional decision explains why I’m satisfied Mr H took reasonable care not to make a misrepresentation. But, in response to the points First Central has made, I make the following additional findings: • Due to the age of Mr H’s car, and the similarity of this variety to other varieties of the same make and model where the modifications come as standard, I am not persuaded that the modifications on this car were so obvious that a reasonable consumer would know they are non-standard. Therefore, I don’t think Mr H’s actions were out of line with those of a reasonable consumer. • As I set out in my provisional decision, online research of similar listings with the same specification – i.e. front grill, etc. I think this would reasonably suggest it’s a specification Mr H’s car could come with as standard. • For the avoidance of doubt, the fact that the online advert didn’t specify the car was modified is the primary reason why I’ve concluded Mr H didn’t fail to take reasonable care not to make a misrepresentation. But I need to consider all the evidence in assessing whether a reasonable person would have known the car was modified. And whether the initial sales advert highlighted the modification or not is a relevant consideration. In this case I’ve concluded that, given the advert doesn’t highlight the changes, coupled with it not being clear and obvious the car was modified, I don’t think Mr H has answered the question in a different way to what a reasonable person would have done. I sympathise with the staff member who had to experience Mr H swearing and hanging up on them and agree that his words were unacceptable. However, I can’t ignore the fact that they were a reaction to First Central’s unreasonable avoidance of his policy. Therefore, as distasteful as it was, I don’t think the event was severe enough to justify overturning the

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compensation award. My final decision For the reasons I stated above, I am upholding this complaint. I am directing First Central Underwriting Limited to: • Remove any record of this policy being avoided/cancelled from internal and external records • Reinstate Mr H’s policy as originally laid out in his Statement of Facts. • Reconsider Mr H’s claim in line with the terms and conditions of the policy. Pay compensation to the value of £300 for the distress and inconvenience of being without a car and having his policy avoided. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr H to accept or reject my decision before 22 April 2026. Joshua Clement Ombudsman

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