Car Decision Reference 2020-0200

• Case Outcome: Upheld
• Subject Matter: Car
• Reference: 2020-0200
• Date: 18 May 2020
• Conducts Complained Of: Lapse/cancellation of policy,Rejection of claim
• Finantial Sector: Insurance

Decision Ref:

2020-0200

Sector:

Insurance

Product / Service:

Car

Conduct(s) complained of:

Lapse/cancellation of policy

Rejection of claim

Outcome:

Upheld

LEGALLY BINDING DECISION OF THE FINANCIAL SERVICES AND PENSIONS OMBUDSMAN

The complaint concerns the Provider’s cancellation of a Motor Insurance Policy because of

the Complainant’s alleged non payment of premium instalments. The Complainant was

involved in a car accident in June 2016. The Complainant advised the Provider of the

accident, but the Provider refused to cover the claim on the basis that the policy had

lapsed due to non payment of premiums. The Provider states that it had issued

correspondence to the Complainant in May 2016, advising him to pay the outstanding

premium amount. The Complainant advises he received no such correspondence.

The complaint is that the Provider incorrectly cancelled the insurance policy and

incorrectly refused to deal with the claim resulting from the Complainant’s accident with a

third party.

The Complainant’s Case

It is the Complainant’s position that he took out car insurance with the Provider in 2016.

He paid a €300 deposit on 13 April 2016, with the remainder to be paid by Direct Debit.

The Complainant states that no documentation was received from the Provider to set up

the Direct Debit.

The Complainant states that he informed the Provider of a Road Traffic Accident that he

was involved in, on 22 June 2016, and states that he was only then advised that his policy

had been cancelled.

- 2 -

/Cont’d…

The Complainant submits that at no stage in advance of this was he informed of any issue

with his insurance policy.

The Complainant says that he never received a reminder letter, nor a cancellation letter as

referred to by the Provider. The Complainant states that on the date the registered letter

was allegedly signed for, he was at work. The Complainant states that there was no one at

the house to accept the post.

The Complainant submits that he received conflicting letters from the Provider after the

cancellation, and received a refund of €112.00. The Complainant considers that the

€112.00 payment would have covered the May 2016 premium.

The Complainant states that the mode of payment was not well explained to him at the

time he took the policy out. The Complainant says that he was expecting the Provider to

send him the Authorisation Letter of Direct Debit to his bank as it had done previously

when he took out an insurance policy with the Provider some years earlier, before

changing to another Provider. The Complainant submits that he thought the same method

of payment would apply and he was awaiting the Provider’s instruction.

The Complainant states that he wants his car insurance cover to be re-instated and he

wants the Provider to cover the claim arising from the road traffic accident that occurred

on 22 June 2016.

The Provider’s Case

A Summary of the Complaint and a Schedule of Questions was issued to the

Provider by this office. The following are the Provider’s responses:

In response to whether the Provider accepts that the Complainant agreed to pay the

premium for the period of insurance, the Provider states:

“No. In circumstances where [the Provider] sent the insured Bank Giro credit forms

and followed its procedures in writing to the address they had on record for the

insured to include a registered post letter on this matter [the Provider] is entitled to

conclude that the insured was not agreeing to pay the premium for the period of

insurance as he took no positive steps to do so himself from the date of inception of

the policy. [The Provider] is satisfied that it's process in dealing with non-payments

goes beyond what is required legally as set out below and for an insured to benefit

from the indemnity of a contract they must accept primary responsibility for

payment of the insurance premium on the agreed terms. To find otherwise would

expose insurers to risks in all such policies where payment has lapsed for whatever

reason and impose an obligation on insurers that the Irish High Court would not

impose on them.

If the FSPO accepts that the insured for whatever reason did not receive any of the

correspondence that [the Provider] states it sent to the address for the insured he