Misrepresentation, Non-Disclosure and Breach ... - Law Commission

I cannot accept that the complainant’s failure to disclose the
information was merely inadvertent (Case 113)
I am unable to conclude that the condition of the boat was
misrepresented innocently or inadvertently (Case 123)
C.73 In other cases, the ombudsman upheld the decision to avoid a policy on the basis
that the information was inaccurate, without setting out a specific finding on the
claimant’s state of mind in their decision:
I am satisfied that the firm asked a clear question and the
complainant gave an incorrect answer (Case 9)
The claimant did not disclose all his convictions when he applied for
insurance (Case 78)
The complainant did not answer accurately the questions asked
(Case 117)
[The form] was not completed fully and accurately and misled the firm
(Case 119)
C.74 In Case 81, the ombudsman specifically stated that the claimant must answer
accurately, even if she did not believe the question to be material:
She had a duty to answer the questions accurately, whether she
believed them to be material or not. Although… she states that she
did this, I am not satisfied that this is so.
C.75 In Case 112, the ombudsman accepted that the failure to mention a problem may
have been “an oversight”, but commented:
The firm cannot reasonably be expected to be held to the contract if it
entered into it on the basis of wrong information which the
complainant supplied as a result of insufficient care.
C.76 We should stress that these examples look only at the words the ombudsman
used to justify the decision – not at the substance. We suspect that, in many of
the cases outlined above, if the ombudsman had been forced to use one of the
four categories, they would have labelled the misrepresentation as deliberate or
at least reckless. Furthermore, some of these cases dated from 2003, when the
ombudsman approach was still being refined. The words used, however, suggest
that many ombudsmen expect consumers to answer questions carefully and
accurately. They are prepared to apply the rigours of the law when they fail to do
so even if (as discussed below) the non-disclosure may not have had a decisive
effect on the whether the claim would have been paid.
STAGE 4: INADVERTENT NON-DISCLOSURE: WHAT WOULD THE
INSURER HAD DONE?
C.77 The final stage of the process applies only where the non-disclosure is found to
be inadvertent. Here the FOS asks what policy terms the insurer would have
offered if they had been aware of all the information. In practice there are three
possibilities:
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