We look at Madock's complaint about his insurer using debt collectors to chase an additional premium they charged after they found out he had points on his licence he hadn't disclosed.
Madock complained that his insurer had asked for additional premium after it discovered he hadn’t mentioned that he had 3 points on his driving licence when he bought his car insurance. He accepted he hadn’t taken enough care when giving the answer, but thought it was unfair that he was now being chased by debt collectors because he hadn’t paid the additional premium.
How we helped
We established that when Madock took out his policy in 2017, he’d been asked if he had any points on his driving licence in the last five years. Madock hadn’t mentioned the three points from 2014. We also found out that the insurer discovered this information four weeks after the policy had started. The insurer had accepted Madock’s explanation that he thought the points had ‘dropped off’ his licence after three years, and that he hadn’t checked this before incorrectly answering the question.
Putting things right
We explained that CIDRA set out what an insurer can do when there’s a qualifying misrepresentation and where there is no claim under the policy – as in Madock’s case. Although we accepted that the insurer would have charged a higher amount had it known about the three points, CIDRA didn’t allow the insurer to pressure Madock to pay that amount. It could have told Madock that it would only settle future claims proportionately to the amount he’d paid – in which case Madock could have cancelled his policy. Or it could have said it was going to cancel his policy and given him reasonable notice. But what the insurer couldn’t do was force Madock to pay the additional premium.
In the end, the insurer and Madock agreed that he’d pay the additional amount to keep his policy going. The insurer also offered £150 compensation for the distress it had caused by getting debt collectors involved when it shouldn't have.