ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.
The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.
These are of particular relevance in two types of insurance – household and caravan policies. Our view is well established: insurers must alert their policyholders to any significant requirements before the insurance comes into force. It is not sufficient simply to send out the documentation and rely on policyholders reading it to notice the standards they are required to meet. Nor is it sufficient to rely on a question on the proposal regarding security arrangements. If the insurance depends on policyholders having certain security devices in place, then that must be drawn to consumers’ attention before they commit themselves to the insurance.
If, when applying for the insurance, a consumer claims, incorrectly, to have certain locks, and the insurer subsequently rejects a theft claim because of this mis-statement, we will expect the insurer to demonstrate that it had only agreed to issue cover on the basis that the policyholder had the specific locks which he or she claimed, incorrectly, to have.
In our view, a policyholder who has failed to comply with the security requirements in force will not lose protection under the policy unless failure to comply is relevant to the loss. If, for example, the policyholder agreed to have his or her window locks secured whenever the house was empty, but then forgot and was burgled, it would not be reasonable for the insurer to reject the claim unless the burglars were able to get into or out of the house by means of an unlocked window.
Many caravan insurances stipulate that theft cover will not operate unless the policyholder has taken various security measures. One insurer requires the following:
"The caravan must have an effective hitch lock which protects the coupling security bolts, in addition to a proprietary heavy duty wheel-clamp with a high security integral lock".
If the caravan is unattended for more than 24 hours, it must be kept "in a properly fenced and securely locked storage compound with the following minimum requirements: security lighting, mobile security patrols and/or resident caretaker or owner or operator of the storage location whose private dwelling shall be situated immediately adjacent to the sole access point of the compound".
In addition, if the caravan has a value in excess of £5,000, it is required to have its own security lighting and alarm systems.
These requirements are not typical, nor would they be matters of obvious common sense for most consumers. They must therefore be highlighted before consumers commit themselves to taking out the policy. As a general rule, the more unusual and burdensome the terms of the policy, the greater the insurer’s duty to ensure consumers are aware of these terms before they pay for the policy.