Cancelled Insurance

DullGreyGuy

Aretnap said:

DullGreyGuy said:

Aretnap said:

DullGreyGuy said:

Aretnap said:

DullGreyGuy said:

Did Admiral state that they wouldn't have insured the property had you declared the flooding to the garden?

If they accept it was careless they can only cancel the policy if they wouldn't have insured it had you given the accurate information.

Are you sure that's 100% correct? They can certainly only refuse to pay a claim for an incident that has already happened if they would not have provided cover at all, but if I'm reading correctly CIDRA does give them the right to cancel the policy going forwards. (Section 9 below)

https://www.legislation.gov.uk/ukpga/2012/6/schedule/1/enacted

If the insurer does give the consumer notice of cancellation, the consumer does have the right to cancel the policy himself and this avoid having a cancellation on record, but that ship has presumably sailed.

S1P1:

Careless misrepresentations—claims

4. The insurer's remedies are based on what it would have done if the consumer had complied with the duty set out in section 2(2), and paragraphs 5 to 8 are to be read accordingly.

5. If the insurer would not have entered into the consumer insurance contract on any terms, the insurer may avoid the contract and refuse all claims, but must return the premiums paid.

6. If the insurer would have entered into the consumer insurance contract, but on different terms (excluding terms relating to the premium), the contract is to be treated as if it had been entered into on those different terms if the insurer so requires.

7. In addition, if the insurer would have entered into the consumer insurance contract (whether the terms relating to matters other than the premium would have been the same or different), but would have charged a higher premium, the insurer may reduce proportionately the amount to be paid on a claim.

If Admiral in this case say they won't offer insurance to those with prior flood issues then they can use clause 5 above to void the contract, refuse the claim but unlike a reckless or intentional misrepresentation they have to return the premium.

 If Admiral say they would have accepted the risk but on different terms, eg exc flood, then those terms are considered to be in place and any claim is adjusted based on the percentage of underpaid premium and under the new terms (the OP hasn't said what the new claim was for)

There is nothing in the legislation saying they have to give the customer the option to cancel it themselves if they have the right to void the policy... technically there is nothing to cancel as the legal effect of voiding is that the contract was never in place.  

You're talking about voiding the policy from inception. I'm talking about cancelling the policy going forwards.

If a careless misrepresentation comes to light 6 months into a 12 month policy the insurer has to deal with existing claims as you say - but they do still explicitly have the right to cancel the policy, ie terminate it, not honour the remaining 6 months.

If by virtue of sub-paragraph (2) or (3), the insurer would have either (or both) of the rights conferred by paragraph 6 or 7, the insurer may—

(a)give notice to that effect to the consumer, or

(b)terminate the contract by giving reasonable notice to the consumer.

(5) (Only relevant to life insurance)

(6)If the insurer gives notice to the consumer under sub-paragraph (4)(a), the consumer may terminate the contract by giving reasonable notice to the insurer.

(7)If either party terminates the contract under this paragraph, the insurer must refund any premiums paid for the terminated cover in respect of the balance of the contract term.

(8)Termination of the contract under this paragraph does not affect the treatment of any claim arising under the contract in the period before termination.

I made a mistake saying that in this situation the consumer has the right to get their cancellation in first, that applies if the insurer takes the alternative approach of telling the consumer that they'll only pay X% of any claims that happen in the next 6 months.

The section you are quoting from is if the misrepresentation is identified in the normal course of business not at the point of claim. The OP's issue has been identified at the point of claim. 

Outside of the claims situation the insurer gains the additional option to cancel the policy even if they would have offered terms for a partial refund and in that scenario the insured can effectively counter cancel 

Ah, fair point, I'd missed that bit.

It seems rather counter intuitive that the insurer can terminate it or not depending on when and how the misrepresentation was discovered. It would seem fair enough to me for Admiral to say to the customer "you didn't tell us about the flood, we accept that it wasn't deliberate so we'll pay 80% of the claim, however you will have to find a new insurer as of next week."

What's the rationale for effectively forcing them to leave the policy running to its end in this situation, but not if the misrepresentation came to light sure to (say) a routine driving licence check?

The main point is that they cannot avoid the claim if they would have provided cover... they are free to cancel it after paying the claim if they want but have to return the forward premiums (if paid in full at inception)

So the rational is for consumer protection, if they make a careless error and the insurer would have offered terms the claim has to be paid (proportionally). 

What has been interesting and hasn't been fully tested (as far as I know) is if the careless false declaration is about sums insured and the insurance contract has an averaging clause. CIDRA works on the difference in premium whereas Averaging works on the difference in limits... does the insurer have free choice between which of the two to pick? The cases I've seen on the FOS to date the insurer has either 1) allowed the insured to pay the AP and then settled the claim in full or 2) applied averaging. In both cases this was a much better result for the consumer than if the CIDRA rules had been applied

tinatails

Can anyone recommend an insurer that deals with cancelled insurance ? We need to renew now on a new property (not the one that has the flood claim) and our broker is quoting double to what they quoted back at the end of August!
thanks.