Lloyds Bank General Insurance Limited · DRN-6218099

The complaint Mr D complains that Lloyds Bank General Insurance Limited (‘Lloyds’) voided his home insurance policy and didn’t pay his burglary claim. What happened Mr D held a home insurance policy underwritten by Lloyds. Mr D raised a claim after his property was burgled, and during the claim Lloyds said they identified Mr D had two previous escape of water claims, but when he took out the policy, he only disclosed one claim. Lloyds said this was a careless misrepresentation which entitled them to void the policy and refund the premiums he’d paid. And because the policy effectively then didn’t exist, they didn’t need to deal with the claim. Mr D didn’t think this was fair and raised a complaint. He said he didn’t think he’d answered any questions incorrectly when he took out the policy as both claims were from the same escape of water. And he outlined he’d been suffering from a range of medical issues and vulnerabilities at the time, including cognitive fog, memory issues, impaired concentration, and anxiety. Lloyds didn’t change their stance on voiding Mr D’s policy and not dealing with his claim. They said if they had known Mr D had two previous claims the policy would not have been offered, due to their underwriting criteria. Mr D remained unhappy and brought his complaint to this Service. An Investigator looked at what had happened but didn’t recommend Mr D’s complaint should be upheld. The Investigator said he was satisfied there had been a qualifying misrepresentation and thought Lloyds’s actions were in line with the relevant law, the Consumer Insurance (Disclosure and Representations) Act 2012 (‘CIDRA’). Mr D didn’t agree with the Investigator’s conclusions. He maintained the two claims were for the same event and it was plausible for a reasonable consumer to misunderstand how many “claims” existed for what they recalled as one incident. Mr D asked for an Ombudsman to consider the complaint – so, it’s 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’ve reached the same outcome as the Investigator, and I do not uphold this complaint – I’ll explain why. Under CIDRA, Mr D had a duty to take reasonable care not to make a misrepresentation to Lloyds. This duty applies both when the policy is first taken out, and at any subsequent renewal. The standard of care is that of a reasonable consumer.

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If a consumer fails to take such reasonable care, the insurer has certain remedies they can take, provided the misrepresentation is – what CIDRA describes as - a qualifying misrepresentation. For it to be considered a qualifying misrepresentation, the insurer has to show that the consumer breached the duty to take reasonable care not to make a misrepresentation and that they would have offered the policy on different terms, or not at all, if the consumer hadn’t made the misrepresentation. CIDRA sets out a number of considerations for deciding whether a consumer failed to take reasonable care. One of these is how clear and specific the insurer’s questions were when taking out the policy. If a misrepresentation is found to have been made, the remedy available to the insurer under CIDRA depends on whether the misrepresentation was deliberate, reckless, or careless. Mr D was asked a number of questions when he took out the policy with Lloyds, but the one I find to be relevant to this complaint was about Mr D’s claim history, which said: “ln the last 3 years, how many paid buildings insurance claims have you, or anyone currently living with you, had?” (my emphasis) Mr D answered “one”. Lloyds say their checks during Mr D’s burglary claim showed two previous buildings claims within the last three years: one in May 2023 and another in June 2023, both for an escape of water. Mr D has said both claims were the result of the same underlying event, and he has also outlined his medical and vulnerability issues he had at the time which he says would have impacted his ability to understand the questions being asked. I was sorry to hear the underlying burglary incident had worsened Mr D’s medical issues and I’ve kept them in mind when considering what I believe is a fair and reasonable outcome here. The test under CIDRA as to whether Mr D took reasonable care is one of a reasonable consumer, not one unique to Mr D. So, while I take on board what he’s said about his understanding of what he needed to disclose, I have to consider what I think a reasonable person would have answered when asked the question he was asked. Having looked at the question asked, I’m satisfied it was clear enough to prompt a reasonable consumer to realise that Lloyds was asking how many claims had been made. And even accounting for what Mr D has said about both claims being due to the same event, the question did not ask how many events had occurred, it asked how many paid claims Mr D had. Additionally, I’ve seen nothing to demonstrate Mr D’s medical concerns would have led to an inability to understand the question being asked. And while I can see Mr D has referred to other Ombudsman decisions about unclear questions; while each case turns on its own individual facts, I can see the wording considered in the decisions Mr D has referred to was materially different to the question Lloyds asked here, which I find to be sufficiently clear. As such, it follows I think a misrepresentation was made when Mr D answered the question about how many paid claims he’d had. Because I’m satisfied Mr D failed to take reasonable care not to make a misrepresentation when he took out the policy, I’ve then gone on to consider whether I’m satisfied this was a ‘qualifying’ misrepresentation under CIDRA. Lloyds has provided underwriting evidence which shows they wouldn’t have offered a policy at all if they had known about the additional claim. As this is considered commercially sensitive information, I can’t share it, but I have carefully considered it, and I’m satisfied it supports Lloyds’s decision not to offer a policy. I’m therefore satisfied the misrepresentation would be considered qualifying under CIDRA.

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I’ve then moved on to the remedies Lloyds has under CIDRA, given Mr D’s failure to take reasonable care not to make a qualifying misrepresentation. The remedies available to Lloyds under CIDRA depend on what type of misrepresentation was made. Lloyds has classified Mr D’s misrepresentation as careless, and based on the evidence I’ve seen, I think that was a reasonable position for them to take. This means they would be entitled to avoid the policy and not deal with Mr D’s claim. But they would need to refund the premiums Mr D paid for the policy. I understand Lloyds has refunded the premiums paid and as that’s what they’re entitled to do under CIDRA, I’m satisfied that’s fair and reasonable. Whilst I naturally sympathise with Mr D’s position, and I recognise he has suffered an unfortunate loss which would have had an impact on him, I think that Lloyds has acted in line with the relevant law and industry guidelines. And because CIDRA reflects this Service’s long-established approach to misrepresentation cases, I’m satisfied following it produces a fair and reasonable outcome in this complaint. My final decision For the reasons set out above, 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 D to accept or reject my decision before 23 April 2026. Stephen Howard Ombudsman

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