The power to settle financial complaints.
The power to settle financial complaints.
ombudsman news issue 55 [PDF format]
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.
August 2006
A client of ours put in a claim under his comprehensive motor policy after his car was stolen. When the insurer looked into the claim – it found the vehicle (bought by our client in good faith – second-hand) was itself a stolen car that had been 'cloned'.
The insurer says that because of this it won't pay the claim. How does the ombudsman service deal with this kind of dispute?
Cloning is the vehicle equivalent of identity theft. It's a growing problem in the second-hand car market. Criminals replace the number plates on a car – usually a stolen car – with the number plates of an almost identical car of the same make, model and colour. They usually change other identifying features as well, including the engine number.
When we look at disputes involving a cloned vehicle, we try to establish whether it is reasonable to assume that the consumer bought the vehicle in good faith and was unaware of its false 'identity'.
Carrying out an 'HPI' check (which looks into a vehicle's history) is a sensible precaution for any prospective buyer of a second-hand car. Unfortunately, since the check looks at information about the original (legitimate) vehicle, it is unlikely to uncover the fact that a car has been cloned. Even so, one of the things we will usually consider is whether the consumer undertook this check.
Other matters that we usually consider, as indications of whether the consumer acted reasonably and in good faith at the point of purchase, include whether they:
We will also note whether the purchase price was comparable to that of other vehicles of a similar make, model and age.
We would usually expect the insurer to deal with the claim if:
The fact that a vehicle has been cloned means that it does not have a complete and untainted history – and this may affect the amount the insurer should pay when meeting a successful claim. To some extent there are similarities with the situation involving vehicles that have been rebuilt following a technical 'write-off'.
With a stolen, cloned vehicle, if the policyholder clearly took all reasonable steps to ensure the authenticity of the vehicle they were buying, they have a defeasible title to the vehicle and should receive the full market value of a similar vehicle with an unblemished history. Some deduction might be appropriate where policyholders acted in good faith but failed to take reasonable steps that would probably have alerted them to the problem.