A policyholder’s failure to disclose that a previous insurer had cancelled his cover for fraud and dishonesty cost him a claim for tornado damage almost 15 years later.
The National Financial Ombud Scheme (NFO) upheld the insurer’s rejection of the claim after finding that the policyholder had answered “no” when expressly asked whether an insurer had ever declined, cancelled, or denied him cover. The case was included in the NFO’s 2025 annual report.
The complainant submitted a claim for damage to his insured property following a tornado.
During the assessment of the claim, he told the insurer’s appointed assessor that he had previously held a household contents policy with another insurer between 2006 and 2007. While covered under that policy, he had submitted a fraudulent claim for a stolen ring.
The previous insurer rejected the claim and subsequently cancelled the policy on the grounds of fraud and dishonesty. The current insurer verified this information by obtaining a copy of the cancellation letter from the previous insurer.
When the complainant applied for his current policy, the insurer’s agent asked him during a recorded sales call whether he had ever had an insurance application or policy declined, cancelled, or denied, or whether special conditions had ever been imposed on his cover.
The complainant answered “no”.
The insurer said the previous fraud-related cancellation was material to its decision about whether to accept the risk. It maintained that it would not have issued the policy if the cancellation had been disclosed, regardless of how long ago it had occurred.
The insurer relied on a general policy condition requiring applicants to provide full and accurate information about the risk. The condition stated that the policy, or part of it, could be invalid if the policyholder supplied incorrect or misleading information or failed to disclose relevant information.
Previous cancellation regarded as irrelevant
The complainant disputed the rejection of his tornado claim.
He argued that the previous cancellation had occurred almost 15 years earlier, and he had therefore regarded it as irrelevant when applying for the current policy.
He also raised concerns about the transcript of the sales call, alleging it contained altered wording and omitted phrases. In addition, he argued that the question asked by the sales agent was confusing and overly broad.
The complainant further submitted that the insurer had previously paid smaller claims under the policy. In his view, this indicated that the insurer had already satisfied itself with his risk profile.
The NFO listened to the recording of the sales conversation and found that the question was clear, direct, and unambiguous.
The use of the word “ever” meant the complainant was required to disclose previous cancellations regardless of how much time had passed. The NFO also noted that he had known about the fraud-related cancellation when he applied for the current policy.
The complainant’s concerns about alleged discrepancies in the written transcript did not affect the outcome because the audio recording established what he had been asked and how he had answered.
The NFO also found that the insurer’s payment of earlier, lower-value claims did not prevent it from rejecting the tornado claim. Those claims had not prompted the same level of validation, and the information about the previous cancellation emerged only during the assessment of the tornado claim.
Non-disclosure affected acceptance of the risk
The NFO found that the complainant’s failure to disclose the previous cancellation was material to the insurer’s decision to accept the risk.
The insurer’s evidence was that it would not have issued the policy if the complainant had disclosed that his previous cover had been cancelled for fraud and dishonesty. The policy would therefore not have come into force.
The NFO consequently upheld the insurer’s rejection of the tornado claim.
According to the NFO, the case illustrates the importance of answering questions at the application stage fully and accurately. A previous fraud-related cancellation may remain relevant many years later, particularly when an applicant is expressly asked whether an insurer has ever cancelled or declined cover.
