Liverpool Victoria Insurance Company Limited · DRN-6239146

The complaint Mr K complains that Liverpool Victoria Insurance Company Limited (LV), has unfairly increased the price of his policy when he notified them of an incident which happened before the policy was incepted. Mr K feels the increase in price was unjustified and LV should not have cancelled the policy when he didn’t pay the increase. He asked for the cancellation marker to be removed, the additional costs he incurred for his insurance to be refunded and compensation for the distress and inconvenience. What happened Mr K had a buildings insurance policy in place with LV which was incepted in 2023. The policy renewed in October 2024 and in July 2025, Mr K called LV to notify it of an escape of water to the property in 2022. He said damage had been caused but this was repaired and he was calling to enquire about claiming for the cost of the repairs. On 15 July 2025, LV issued what it calls a “claim impact” letter to Mr K, this explained because of the information about the claim and intention to make a claim, it was asking for an additional £165.35 in premium. Mr K didn’t respond to the letter and another was sent on 24 July asking Mr K to make contact and payment by 31 July 2025. It said if no payment was made, the policy would be cancelled. Mr K didn’t make the payment and his policy was cancelled. Mr K complained about the actions of LV. He said he didn’t make a claim but had called to enquire about making one and he didn’t think it was fair he was asked to pay more during the term of the insurance because of this. LV said it didn’t think it had done anything wrong. It explained its usual process is to charge an additional premium as a result of an attempted claim. It said when registering the claim, it expected that cover will be available and the system automatically calculates the claims impact on the premium following the claim. This changes its outlook on the potential risk and the additional premium is charged. Because Mr K didn’t pay the premium or make contact, it didn’t agree it had acted unfairly when the policy was cancelled. LV acknowledged there was some delays with the complaint handling and service provided when doing this and it paid £50 to recognise the impact of these failings. Our investigator looked at this complaint and didn’t think LV needed to do anything else. They said they believed the premium had been correctly calculated to reflect the change in the view of the risk with the claim event included and the premium charged was correct. When Mr K didn’t engage with LV and its request for payment, it cancelled the policy as it said it would and notice was provided. They also explained that complaint handling isn’t a regulated activity and because of this, they couldn’t comment on the £50 offered for the failings here.

-- 1 of 5 --

Mr K disagreed and asked that the complaint be referred for decision. He didn’t think it was fair for LV to charge him more, midway through the policy for a claim. And even if it was, he said he didn’t make a claim and was simply making an enquiry about the past event and whether he could recover his costs as a claim. I issued a provisional decision on this complaint on 6 March. I set out I was planning on asking LV to do something else as I didn’t think it had treated Mr K fairly with how it handled this matter. I’ve included what I said below: I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. I’m planning on upholding this complaint, as I don’t think the actions taken by LV are fair and Mr K has lost out as a result of this. LV has said the terms of its policy allow it to vary the price of the insurance if a claim is registered. This is done to reflect its change in the view of the risk because of the claim incident. The term says the following: “If you make a claim after we’ve sent your renewal, your price may change to reflect this. If this happens, we’ll send you an updated invite or letter confirming the change in premium if you’ve already renewed and the claim happened before your renewal date.” When an insurer offers to provide insurance to a customer, normally for a set period of time, it agrees what the insurance will cover and what it thinks the cost of the policy should be (the premium) to allow it to cover this risk. The price is offered and if accepted by the customer, the cover is put in place for the set period of time. Insurers rely on good faith that the information presented ahead of a policy being incepted is correct to allow them to understand the risk which it is insuring. Consumers have an obligation when the policy is taken out, to make sure reasonable care is taken not to misrepresent the facts about themselves and the item to be insured. This duty is set out in legislation under the Consumer Insurance (Disclosure and Representations) Act 2012 (CIDRA) and it explains what action an insurer can take if the consumer has breached their duty to take reasonable care not to misrepresent. LV has said this isn’t relevant here because it hasn’t said Mr K misrepresented when the policy was taken out. Instead, it has relied on the policy term which it feels allows it to vary the premium if it is notified of a claim which took place prior to the inception of the policy. While I accept the wording of the policy is clear and having the option to change the price prior to the inception of the policy is important – as prior to the acceptance of the offer, the contract can be varied, this cannot be relied on in place of the relevant legislation when there is a misrepresentation. And for this complaint CIDRA is the relevant legislation and sets out what an insurer can do if something becomes known after the policy has been put in place. When Mr K took out his policy with LV, the incident which he later called to discuss as a claim, had already occurred. LV hasn’t shared what questions were asked at the inception of the policy or shown that Mr K didn’t take reasonable care to answer these. But it is clear that it feels its view of the risk would have been different had Mr K presented different information ahead of the policy being incepted. The change is not a mid-term adjustment and can only be described as a misrepresentation

-- 2 of 5 --

at inception with information not being shared – albeit whether a clear question was asked about claims or incidents hasn’t been explained. But I am not persuaded this can be considered as anything else. The terms of the policy look to set out a way for LV to deal with this, with it being specific to new information about previous claims. However, I don’t think it is fair this goes beyond the remedies available within CIDRA. CIDRA sets out, when there has been a misrepresentation and it is shown the insurer would have acted differently had it been aware of the information at inception, that certain steps can be taken. If it would have charged a higher premium as a result of the knowledge now, a claim could be settled proportionately. But CIDRA doesn’t say the price of the policy can be increased, although it can ask a customer to pay more. Here, LV has shown how the claim, even recorded as a notification only incident would have changed its view of risk for Mr K when the policy was taken out. So, I don’t think what it asked him to pay when it explained this was unreasonable. I understand he’s questioned this and whether it should be recorded as a claim or not, but I don’t think there is an error in how this has been recorded. However, LV couldn’t force Mr K to pay the increase. As I’ve said, CIDRA doesn’t allow for a price increase to be applied retrospectively as a remedy and it follows, that any action which negatively impacted Mr K as a result of this is not fair. LV should have explained to Mr K that in order for it to provide 100% of the cover he had in place for any claims, as set out in the schedule when the policy was incepted, that he needed to pay an additional premium. I don’t think the detail of its “claim impact” letter did this. Nor did it explain that if Mr K didn’t pay the increase, claims could be settled proportionately which Mr K might have wanted to avoid. If he didn’t wish to continue to insurer his property with the policy with LV he had for the price now offered to avoid this, he should have been given the option to cancel the policy himself. LV didn’t take these steps and instead of providing Mr K with this information and options, it gave notice of the cancellation when Mr K didn’t respond or make the payment. Mr K has said this caused distress as he needed to find new insurance at short notice and the cost of this has been inflated because of the need to now declare a previously cancelled policy. I don’t think this is fair and Mr K has lost out as a result of the actions of LV. I think it is fair that LV removes any internal and external markers on any databases which show Mr K’s policy was cancelled by it. I think had he been given the information about his options and the increase in price of the policy, he would have cancelled this himself and not have an insurer led cancellation he needs to declare. The cost of insurance changes regularly and each insurer will offer a different price based on its view of the risk. And while I accept Mr K feels the cost of his policy is greater now because of the cancellation previously, this isn’t something which has been demonstrated. But, if Mr K can demonstrate the cost of his insurance with his new provider would have been lower had the cancellation marker not been there, I’d expect LV to cover the cost of this difference. I also think LV should pay Mr K £200 for the added distress and inconvenience of this situation. I think it is likely he may have always chosen to move his insurance elsewhere, had all the relevant information been provided but the stress of this was added to when the policy was cancelled without the choice provided and this needs to be recognised. Overall, I am not persuaded LV has treated Mr K fairly. I think the policy term it has sought to rely on, cannot override the obligations and remedies available from CIDRA. It hasn’t been shown that a misrepresentation was not made at inception and with claim and incident

-- 3 of 5 --

history being relevant standard disclosure when a policy is taken out, I think this would have been asked about. Mr K notified LV of a previous incident after the inception of the policy and this was after it had set out what the premium would be to cover the risks insured. CIDRA sets out what is available as a remedy if the disclosure ahead of the inception included a misrepresentation and I don’t think LV has demonstrated how it can fairly avoid these remedies with the actions its taken. I think the actions of LV could have provided Mr K with a benefit. And having a process which looks to make sure cover would have been provided with 100% of this by increasing the premium would lead to a positive outcome with the claim. But the lack of information and subsequent cancellation of the policy by LV when this wasn’t paid has caused detriment and this needs to be put right. As our investigator said, I cannot comment on the complaint handling and the offer made for this and my recommendation below is separate to the award made previously. I plan on asking LV to do the following now to put things right in recognition of the actions it took: - Remove any cancellation markers from its and any external data bases. - If Mr K can demonstrate the cost of his policy would have been lower had the cancellation marker been removed, it should refund Mr K the difference in cost here with interest added. - Pay Mr K £200 for the distress and inconvenience added here. LV accepted the outcome proposed. Mr K didn’t provide a response to the provisional 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. With LV accepting what I set out in the provisional decision, and no objection received from Mr K, I see no reason to depart from what I’ve set out above and I uphold Mr K’s complaint in line with this. Putting things right To put things right now, LV need to do the following in recognition of the actions it took: - Remove any cancellation markers from its and any external data bases. - If Mr K can demonstrate the cost of his policy would have been lower had the cancellation marker been removed, it should refund Mr K the difference in cost here with interest added. - Pay Mr K £200 for the distress and inconvenience added here. My final decision For the reasons I’ve set out in the provisional decision include here, I uphold Mr K’s complaint.

-- 4 of 5 --

Under the rules of the Financial Ombudsman Service, I’m required to ask Mr K to accept or reject my decision before 17 April 2026. Thomas Brissenden Ombudsman

-- 5 of 5 --