The insured took out multiple vehicle policies with the insurer for mechanical breakdown cover.  When he came to claim on one of the vehicles the insurer tried to avoid paying on the basis that he had not disclosed to them that he was providing a commercial shuttle service to paying passengers.

The Insurance & Financial Services Ombudsman found that the insurer had no records of any questions asked of the insured when he took out the various policies.  It had no records of any conversations or any contemporaneous notes.  The Insurance & Financial Services Ombudsman Scheme “expects that an insurer will have the systems and procedures in place to capture this information”.

As the insurer had put in place a process that did not ask about the intended use of the vehicle prior to issuing the policy, the insurer could not rely on non-disclosure to avoid the policy.

In addition the insurer had acted inconsistently with the stance it was now taking in relation to claims on other vehicles, when it already knew that the insured was running a commercial shuttle service.

Alan Knowsley
Insurance Lawyer