Misrepresentation

What does misrepresentation mean?

Misrepresentation happens when information given to an insurer is wrong, incomplete or misleading. It can happen when you get an insurance quote, renew a policy or ask to change your cover.

For personal insurance, the Consumer Insurance (Disclosure and Representations) Act 2012 says consumers must take reasonable care not to make a misrepresentation.

You do not usually have to guess what an insurer may want to know. You should answer the questions asked fully and carefully. However, you may also need to report certain changes during the policy if its terms require you to do so.

Non-disclosure is closely related. It means leaving out information that should have been provided, such as when answering a clear question from an insurer.

What information could be affected?

For car insurance or van insurance, misrepresentation could involve:

• Who is the main driver
• Previous claims or motoring convictions
• How the vehicle is used
• Where it is kept
• A vehicle modification
• Incorrectly naming another person as the main driver, which may be fronting

For home insurance, it could involve previous flooding, subsidence, claims, long periods when the property is empty, or how the home is occupied.

The details an insurer needs will depend on the policy and its underwriting rules.

When can an insurer take action?

Not every mistake allows an insurer to cancel a policy or refuse a claim.

For an insurer to have a remedy under the 2012 Act, it must normally show that the customer failed to take reasonable care. It must also show that the correct information would have affected whether it offered cover, the price charged or the policy terms. This is called a qualifying misrepresentation.

The clarity of the insurer’s questions can matter. The Financial Ombudsman Service explains that it may consider what was asked, what answer was recorded and what evidence shows how the insurer would have acted.

What could happen to the policy or a claim?

The possible outcome depends on whether the misrepresentation was careless, deliberate or reckless.

A deliberate or reckless misrepresentation broadly means that the customer knew the information was untrue or misleading, or did not care whether it was, and knew it mattered to the insurer, or did not care whether it did. The insurer may be able to treat the policy as though it never existed and refuse claims. It may also keep the premium unless that would be unfair. These remedies are set out in Schedule 1 of the 2012 Act.

For a careless misrepresentation, the outcome should usually reflect what the insurer would have done with the correct details. It may:

• Avoid the policy, meaning it is treated as though it was not in force, and refuse claims. The insurer must return the premiums paid
• Apply different policy terms
• Reduce a claim in proportion to the premium that should have been charged

These outcomes are not automatic. They depend on the questions asked, the information provided and the insurer’s underwriting evidence. The Financial Ombudsman Service’s consumer guidance explains how complaints about these decisions may be assessed.

What should you do if information is wrong?

Check your quote summary, statement of fact, policy schedule and renewal documents. Claims, conviction dates and details about other drivers can be easy to enter incorrectly.

Do not guess if you are unsure. The Association of British Insurers advises customers to ask their insurer, broker or insurance seller for help when they are uncertain about an answer.

Tell us promptly if you notice a mistake or if a change is one your policy requires you to report. We can pass the updated information to the insurer. The insurer will decide whether the policy can continue and whether the premium, terms or cover need to change.

How we may be able to help

We arrange car insurance, van insurance and home insurance through insurers.

We can help you provide clear information about matters such as previous claims, convictions, unusual vehicle use or non-standard property details. Providing full information does not guarantee acceptance, a set price or a particular level of cover. Any policy will depend on the insurer’s decision, the full details provided and the policy terms.

In summary

Misrepresentation means giving an insurer information that is inaccurate, incomplete or misleading. Consumers must take reasonable care when answering questions, but insurers must also show that the error affected their decision.

The outcome may range from no action to changed terms, a reduced claim or the policy being treated as though it never existed. It will depend on the facts and what the insurer would have done with the correct information.