Modifications at the insurance ombudsman
Discussion
http://www.financial-ombudsman.org.uk/publications...
79/10 said:
Insurer refuses to pay claim for theft of car because consumer had not disclosed the modifications made to his vehicle
Mr T's car was stolen from the street where he parked it while he was visiting his local gym. He put in a claim under his motor policy and later told us he was "totally shocked" when his insurer refused to pay out.
The insurer said it was clear from the information Mr T provided in his claim that the car had been modified. However, he had never notified the insurer of any modifications and he had answered "no", when asked on the proposal form if he had modified or altered the car.
The insurer had therefore "voided" his policy (in effect treating it as though it had never existed) and it told Mr T he was not covered for the theft. Mr T complained that he was being treated unfairly, but the insurer would not alter its view, so he came to us.
Complaint upheld
Mr T confirmed that he had added "a satnav unit, Bluetooth kit, Playstation and CD changer". However, he said he regarded these as "simple additions, not modifications".
We looked at the proposal form that Mr T had completed when applying for his policy. This included a question headed "Modifications", asking if there had been "any changes to the engine, plus any cosmetic changes to the bodywork, suspension, wheels or brakes". Mr T had answered "no".
We accepted the insurer's point that the changes Mr T had made could well have made his car more attractive to thieves. However, there was nothing on the proposal form to indicate that it considered changes of this type to be "modifications". We did not see that Mr T could reasonably have been expected to know, from the examples given by the insurer, that he should have answered "yes" to the question about modifications.
We upheld the complaint and said the insurer should settle the claim in line with the usual terms and conditions of the policy. We said it should also add interest, from the date when the car was stolen to the date when the claim was settled.
Mr T's car was stolen from the street where he parked it while he was visiting his local gym. He put in a claim under his motor policy and later told us he was "totally shocked" when his insurer refused to pay out.
The insurer said it was clear from the information Mr T provided in his claim that the car had been modified. However, he had never notified the insurer of any modifications and he had answered "no", when asked on the proposal form if he had modified or altered the car.
The insurer had therefore "voided" his policy (in effect treating it as though it had never existed) and it told Mr T he was not covered for the theft. Mr T complained that he was being treated unfairly, but the insurer would not alter its view, so he came to us.
Complaint upheld
Mr T confirmed that he had added "a satnav unit, Bluetooth kit, Playstation and CD changer". However, he said he regarded these as "simple additions, not modifications".
We looked at the proposal form that Mr T had completed when applying for his policy. This included a question headed "Modifications", asking if there had been "any changes to the engine, plus any cosmetic changes to the bodywork, suspension, wheels or brakes". Mr T had answered "no".
We accepted the insurer's point that the changes Mr T had made could well have made his car more attractive to thieves. However, there was nothing on the proposal form to indicate that it considered changes of this type to be "modifications". We did not see that Mr T could reasonably have been expected to know, from the examples given by the insurer, that he should have answered "yes" to the question about modifications.
We upheld the complaint and said the insurer should settle the claim in line with the usual terms and conditions of the policy. We said it should also add interest, from the date when the car was stolen to the date when the claim was settled.
79/11 said:
Insurer refuses to pay claim for theft of car because consumer had not disclosed the modifications made to his vehicle
Mr C returned from a short business trip to find his car had been stolen from the side-road where he usually parked it, close to his house. He rang the insurer to report the theft and, while confirming the details, he mentioned that several modifications had been made to the car.
The insurer was not aware that the car had been modified in any way. It told Mr C it would never have offered him insurance if it had known about the modifications. It declared his policy "void" and rejected his claim. Very unhappy with this outcome, Mr C brought his complaint to us.
Complaint upheld
Mr C accepted that he had made a number of changes to his car - but he disputed the insurer's view that these changes amounted to "modifications".
We looked at what the insurer had said about modifications when Mr C applied for his policy. He had completed his application online and we noted that there was a clearly-worded section asking for details of any modifications. Applicants were told to phone the insurer if they were at all unsure about the type of information they were required to provide in this section.
We then checked what Mr C had told the insurer when he reported the theft of his car. The insurer's recording of the call showed that Mr C had not had any difficulty understanding the question when asked if his car had "any modifications". He had responded by detailing all the changes that had been made to his car. We therefore concluded that he had been aware these changes amounted to modifications and that he had failed to disclose them when he applied for his policy.
The insurer argued that Mr C's failure to disclose the modifications was a "material fact"- in other words, something that would influence an underwriter when deciding whether to offer insurance in a particular case, and the terms and conditions that should apply.
In cases where a consumer "deliberately" or "recklessly" fails to disclose a material fact, the insurer is able to "void" the policy (treat it as if it never existed). But if the non-disclosure was "innocent" or "inadvertent", then the insurer should re-write the insurance on the terms it would have offered - if it had known all the facts.
When we asked the insurer to provide evidence of the approach it would have adopted, if it had known the full facts in this case, it sent us a copy of its underwriting manual. This indicated that if the insurer had known about the modifications, it would still have offered to cover Mr C, but it would have increased the premium by 75%.
We had found no evidence to suggest that Mr C had acted "deliberately" or "recklessly" in failing to disclose the modifications - and we concluded that his non-disclosure was "inadvertent". The premium he had paid was only a proportion of the full amount he would have paid - if the insurer had known all the facts. So we said the insurer should pay part of Mr C's claim to reflect the proportion of the (correct) premium that he had actually paid.
As you were Mr C returned from a short business trip to find his car had been stolen from the side-road where he usually parked it, close to his house. He rang the insurer to report the theft and, while confirming the details, he mentioned that several modifications had been made to the car.
The insurer was not aware that the car had been modified in any way. It told Mr C it would never have offered him insurance if it had known about the modifications. It declared his policy "void" and rejected his claim. Very unhappy with this outcome, Mr C brought his complaint to us.
Complaint upheld
Mr C accepted that he had made a number of changes to his car - but he disputed the insurer's view that these changes amounted to "modifications".
We looked at what the insurer had said about modifications when Mr C applied for his policy. He had completed his application online and we noted that there was a clearly-worded section asking for details of any modifications. Applicants were told to phone the insurer if they were at all unsure about the type of information they were required to provide in this section.
We then checked what Mr C had told the insurer when he reported the theft of his car. The insurer's recording of the call showed that Mr C had not had any difficulty understanding the question when asked if his car had "any modifications". He had responded by detailing all the changes that had been made to his car. We therefore concluded that he had been aware these changes amounted to modifications and that he had failed to disclose them when he applied for his policy.
The insurer argued that Mr C's failure to disclose the modifications was a "material fact"- in other words, something that would influence an underwriter when deciding whether to offer insurance in a particular case, and the terms and conditions that should apply.
In cases where a consumer "deliberately" or "recklessly" fails to disclose a material fact, the insurer is able to "void" the policy (treat it as if it never existed). But if the non-disclosure was "innocent" or "inadvertent", then the insurer should re-write the insurance on the terms it would have offered - if it had known all the facts.
When we asked the insurer to provide evidence of the approach it would have adopted, if it had known the full facts in this case, it sent us a copy of its underwriting manual. This indicated that if the insurer had known about the modifications, it would still have offered to cover Mr C, but it would have increased the premium by 75%.
We had found no evidence to suggest that Mr C had acted "deliberately" or "recklessly" in failing to disclose the modifications - and we concluded that his non-disclosure was "inadvertent". The premium he had paid was only a proportion of the full amount he would have paid - if the insurer had known all the facts. So we said the insurer should pay part of Mr C's claim to reflect the proportion of the (correct) premium that he had actually paid.
Sheepshanks said:
You have to wonder how stupid policyholders must be to not declare mods, then eagerly list them when making a claim no doubt hoping to boost the payout! 
Sounds like the second one might have only got 25% of his claim.
He would have got more than halfSounds like the second one might have only got 25% of his claim.
to get 25% they would have needed to have increased his premium 4x or 300% not 75%
giblet said:
This is why I've declared all my mods including a few bits that I plan to fit soon. Didn't add that much to the premium but gives me peace of mind should the worst happen to my rustbucket.
Both of the above also declared what they thought were mods.I'm not so sure about you declaring a mod that isn't fitted
I think you're supposed to tell them about removing a mod too
If you think it's a mod
saaby93 said:
oth of the above also declared what they thought were mods.
I'm not so sure about you declaring a mod that isn't fitted
I think you're supposed to tell them about removing a mod too
If you think it's a mod
I guess it depends on the insurer. I spent a while on the phone with mine discussing the various changes I had made. I was told that there is a charge everytime I amend the policy so I added a few bits that I told them would be fitted in the near future. I'm not so sure about you declaring a mod that isn't fitted
I think you're supposed to tell them about removing a mod too
If you think it's a mod
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