Zurich Insurance Company · DRN-6009998

The complaint Mr A complains that Zurich Insurance Company (“Zurich”) has unfairly voided his home insurance policy following a burglary claim. Any reference to Mr A or Zurich includes respective agents or representatives. What happened The background of this complaint is well known between the parties so I’m going to just summarise the events. • For many years Mr A has taken out his home insurance using a broker (Company A). The insurer of his policy has changed over the years. In March 2023 Zurich became the underwriter of Mr A’s policy. • Mr A’s policy was set up to provide him with £80,000 of contents cover, £24,000 of valuables cover, and had no specified high-risk items worth more than £2,000 listed. • In September 2023 Mr A’s property was burgled and he contacted Zurich to make a claim. During Zurich’s validation it requested Mr A to complete a value at risk (“VAR”) form of both his stolen items and remaining household items. • A further back and forth took place, with Zurich taking steps to interview Mr A about the loss in July 2024. Zurich also obtained a police report and a professional valuation of the jewellery in August 2024. • On 25 October 2024 Zurich told Mr A it would be voiding his policy, saying: o Zurich highlighted the levels of cover Mr A had agreed to, alongside policy terms that explained the consequences of information being incorrect. o The initial VAR form completed by Mr A had come to £125,200 for the remaining items. But following a discussion about items that had been purchased after the loss, this was amended to £106,800. Zurich said the value of the items stolen was £109,940 (which included items far exceeding the £2,000 limit for any one item). o These two sums combined came to a VAR of £216,740 at the time of loss. Zurich said this was well above the contents limit of £80,000 he’d taken out. So, Zurich concluded Mr A had recklessly misrepresented the value of his contents and high-risk items at the inception of the policy in March 2023. o Zurich said it wouldn’t have offered the policy on any terms had they known the value of contents in the home. So, it voided the policy and said it would provide a refund of premiums even though it wasn’t required to. • Mr A raised further concerns and Zurich issued a final response in January 2025. Zurich acknowledged its loss adjuster had previously indicated an average settlement may be a solution, but it said its subsequent decision superseded this opinion. And Zurich stood by its decision to void the policy.

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• Mr A brought the complaint to this Service for an independent review. His representatives put forward a submission on his behalf saying: o Many of the valuable items (jewellery and a watch) were owned by his wife (Mrs A) who had moved into the property in question around July 2023 – several months after the policy was taken out. It said the total value of Mrs A’s items brought into the property after the policy was taken out was £45,800. o Mr A didn’t declare the valuables when his wife moved in but this showed he didn’t make a reckless misrepresentation at the March 2023 renewal as these more expensive contents weren’t in his home at the time. o Mr A’s actions should be viewed as a careless misrepresentation. And to put things right Zurich should pay the claim in full, remove any record of the claim being rejected and the policy voided from internal and external databases. • Zurich challenged the suggestion that Mrs A moved in several months after the policy began. Zurich said this directly contradicted the information Mr A had given within his July 2024 interview in which he said Mrs A had lived in the risk address for eight years. And it said there was no evidence or reasoning to support this significant change in Mr A’s version of events. • Our Investigator looked at what happened and didn’t uphold the complaint, saying: o Zurich was not responsible for the sale of this policy. So, any complaint about the sale of the policy would need to be made to the broker directly. o She was satisfied Zurich wanted to establish the full cost of replacing the contents within Mr A’s property, and at the time of inception the figure of £80,000 was provided to Zurich (either by Mr A or the broker). o There was no evidence to dispute Zurich’s conclusions that the total to replace all of the contents of Mr A’s home was £216,740 (of which many of these figures had originated from Mr A himself). o Mr A’s statement that Mrs A moved in after the 2023 policy began conflicted with his earlier comments to Zurich where he’d clearly said Mrs A had lived at the address for eight years within an interview. The policy had also renewed on the basis of two adults living within the home – which wasn’t otherwise explained, so this persuaded her Mrs A most likely lived there in 2023. o Mr A ought to have reasonably known the total cost of the contents of his home exceeded £80,000 so he hadn’t answered the question reasonably. o Zurich had provided underwriting evidence to show it wouldn’t have insured Mr A if it had known of the value of his contents. And while there had been a dispute over the classification of the misrepresentation (reckless or careless), this point wasn’t material as she was satisfied Zurich wouldn’t have insured him and it had refunded his premiums. • Mr A’s representatives disagreed, saying Mr A had told them: o He’d known his wife for eight years but she had only begun living with him in July/August 2023. He had no idea why this was interpreted as her living at the property with him for this amount of time. And his representatives suggested this was a misunderstanding. o Mrs A had been married to someone else until 2019 and lived elsewhere until moving in with Mr A. And they provided a copy of Mrs A’s driving licence that was issued in October 2021 and listed a different address. They said it was a legal requirement for a driver to update their address – and the fact the driving licence was registered to another address in 2021 was clear evidence

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she didn’t move into the property eight years ago. o Zurich’s recording of Mr A’s misrepresentation has prevented him from obtaining a policy elsewhere. • The Investigator looked again and didn’t change her mind. She said within the recorded interview Mr A had of July 2024 he clearly stated his wife had lived in the property for eight years. And the statement of fact has stated that two adults were living at the property. She’d been given nothing to suggest who the other adult would be – if not Mr A’s wife. She confirmed Zurich had recorded the claim information on the relevant database – but this did would not include the reasons for the voidance. • Mr A stated the policy said two adults as a result of an uncorrected error – as he’d previously lived at that address with his former wife. So, the complaint has been passed to me for an Ombudsman’s final decision. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Having done so, I’m not upholding this complaint. I’ll explain why. In this case there’s no dispute that Mr A has been burgled and an insured peril has taken place under his insurance policy. The dispute in this case concerns the matter of underinsurance. This policy was sold by Company A, and when doing so, it had to provide information that was clear, fair and not misleading. In line with misrepresentation principles, I would’ve expected Company A to ask clear questions that reasonably gave the consumer the opportunity to understand what they needed to do in order to be appropriately insured in the event of a claim. But this complaint doesn’t concern Company A. So, I’ve thought about Zurich’s actions and responsibilities in relation to Company A. And I’m satisfied Zurich has been clear in its intention to Company A that it should obtain the relevant full replacement sums necessary for Mr A’s respective buildings, contents, valuables cover etc. This is reflected in the language Company A used within its renewal which said: “If any information contained within this statement of fact is incorrect or not true to the best of your knowledge or belief, your cover levels on any section are not sufficient to allow the full replacement or repair of your buildings, contents, personal possessions or pedal cycles, or you are unsure, please contact [Company A] as soon as possible as this could affect your insurance cover.” Any complaint about the information asked of Mr A at renewal will need to be brought to Company A in the first instance. So, I’ve looked at the information that was recorded at Mr A’s policy at renewal. I’ve carefully reviewed the renewal documentation. I’m satisfied this clearly sets out the level of cover Mr A had in place. I can’t see this has been disputed but for the avoidance of doubt, this shows Mr A had taken £80,000 of contents cover with a total high risk item limit of £24,000 and single item limit of £2,000 with no specified items. Zurich has said the total VAR at the time of the loss was £216,740, and this was made up of

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£106,800 for the items that were in the home after the burglary, and £109,940 for the items that were stolen. Of which, around £68,375 was jewellery (high risk). Mr A’s representatives have said Mr A had intentionally chosen to not include the value of a high value watch (approximately £13,000) as he was under the impression that he was able to pick and choose what he wanted to insure within the home. This simply isn’t what Zurich has asked him to provide so I see no reason to exclude this sum from the VAR. On this basis, it seems evident that the answer given regarding the level of cover taken was not reflective of the replacement value of all of the contents in the home, and by a considerable margin. So, I’m not satisfied that Mr A took reasonable care to avoid making a misrepresentation when this policy renewed in 2023. Mr A’s representatives have suggested that this Service may have misinterpreted the law around misrepresentation as the questions asked at renewal did not ask for Mr A to give an opinion and instead state a fact. I want to give them assurance of my familiarity with CIDRA and application of this area of law. And that I’m persuaded taking into account the principles of CIDRA that reasonable care was not taken in this instance. Mr A’s representatives have said Mrs A moved in around July/August 2023. And as a result the extent of the contents in the home were not as high in March 2023. And Mr A has indicated that the majority of the high value items of jewellery only entered the home when Mrs A moved in. Even if I accepted this to be the case – and I will address this below – I’m satisfied that Mr A was still substantially underinsured regarding his contents so it wouldn’t change my mind that reasonable care was not taken at the point of renewal in 2023. In line with misrepresentation principles I have to go on to consider whether the misrepresentation was a qualifying one – that is to say, what impact would this information have had on Zurich’s decision to insure Mr A. Zurich has provided commercially sensitive underwriting material with this Service to evidence its position. I won’t share this here given its confidential nature, but I’m satisfied that Zurich would not have provided cover to Mr A if it had known the full replacement value of his contents, valuables and specified items. Furthermore, whether Mrs A lived in the home or not (that is to say if the contents were valued at around £45,800 lower than the sum Zurich has relied upon) Zurich still wouldn’t have provided cover on any terms. And so, in turn Zurich is entitled to void the policy as it has done so. But in this case I also want to stress that I do think it was reasonable for Zurich to take into account the jewellery that Mr A says was owned by Mrs A. I’ll explain why. Mr A’s statement of fact form notes that he is married, and under “Number of adults living in the property” it says “2”. This indicates to me that Mr A was living with another person at the time the policy was renewed. Mr A has retrospectively suggested this was a historic leftover from a previous marriage many years before. So I’ve thought about this against the other evidence available. I’ve also watched the video interview between Mr A and one of Zurich’s agents in July 2024. Within this Mr A was clearly asked who lived at the property with him. He responded to give Mrs A’s name and said they had been married for three years. The agent later says: “and how long has [Mrs A] lived at the property for?”

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Mr A responds: “eight years…getting on that” This interview took place in 2024. And there’s no suggestion or mention within this interview that Mrs A – who he’d been married to for several years by this point – had lived at another address until some several months earlier. The question Mr A was asked was a clear one, and he gave a clear answer Mrs A had lived with him for some time. Mr A’s representatives have since said they have “no idea” where this suggestion Mrs A had lived with him for eight years had come from, but our Investigator has been clear within her assessments upon the statements she’s relied upon. And I’m not satisfied it has provided a reasonable explanation for these inconsistencies. Mr A’s representatives have put forward Mrs A’s driving licence (produced in 2021) and suggested this is a definitive answer as to her address in March 2023 – and at the very least, evidence that she couldn’t have lived with Mr A for the last eight years. And I would agree this is certainly evidence – but I note this is the only piece of evidence that Mr A and his representatives have chosen to put forward to support this assertion. My role requires me to weigh up the available evidence and make a decision on balance. Based on the clarity of the answer Mr A previously gave to Zurich, the omission to mention any recent moves at any earlier stage of the claim until seemingly Mr A’s representatives have taken over his complaint, and the policy itself being set up to cover two adults within the home overall satisfies me it is most likely that Mrs A was living in the home at the time of renewal – so it was fair for Zurich to take into account her belongings within its calculations. But in any case, as I have outlined above, this point has become academic as I’m satisfied Zurich wouldn’t have insured Mr A regardless of whether she was living there. Mr A has focused on the categorisation of the misrepresentation and asked that it be considered a careless misrepresentation instead of either a deliberate or reckless one. The relevance of this is that under CIDRA – if an insurer determines that a misrepresentation was reckless or deliberate it may void the policy in its entirety. However, if it deems the misrepresentation to be careless it must consider whether it would’ve still insured the individual on different terms and return the premiums if not. A qualifying misrepresentation will be deliberate or reckless if the consumer: • knew the information they provided was untrue or misleading or did not care whether it was untrue or misleading; and • knew that the matter to which the misrepresentation related was relevant to the insurer, or did not care whether or not it was relevant to the insurer In my own view, I’m satisfied the categorisation of reckless was a fair one from Zurich – and I think this is reflective of the comments Mr A has made himself about choosing to exclude certain items that he didn’t want to insure, as well as other comments saying he hadn’t checked his documentation. As I’m satisfied Zurich has fairly demonstrated it wouldn’t have insured Mr A on any terms, and it has returned his premiums, this categorisation also remains academic as it has effectively given him the remedy of a careless misrepresentation under CIDRA. So, this isn’t something I’d seek to interfere with.

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My final decision For the above reasons I’m not upholding this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr A to accept or reject my decision before 1 April 2026. Jack Baldry Ombudsman

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