Mr E took out a personal loan to buy a car. When he visited his bank to withdraw the money, the bank suggested he take out car insurance. Mr E arranged for the bank to call him the following day. When it did, it asked disclosure questions at which point Mr E disclosed he had a driving conviction. The bank then had to contact the underwriter before issuing the policy, and told Mr E that it would do so and call him back. Mr E said he asked the bank whether he was covered and was told yes.
The bank didn’t contact him again and two weeks later he had a car accident which damaged both vehicles. Because he was responsible for it, he was liable for damage to the other car. Mr E went to make an insurance claim but was told his policy wasn’t in place. He then complained to our office, seeking the amount he would have been eligible for if the policy had been set up.
The bank told us it contacted the underwriter, which requested additional information from Mr E before it could issue a policy. The bank made one call to Mr E, but didn’t leave a message.
The bank said it wouldn’t have told Mr E he was insured without the underwriter’s confirmation. We considered a misunderstanding which led Mr E to believe he was insured was likely, but there wasn’t enough evidence to conclude the bank advised Mr E that he was insured.
However, we considered the bank should have made further attempts to contact him to let him know he wasn’t insured. Its failure to do so caused his mistaken belief to continue. We therefore suggested the bank accept responsibility for a portion of Mr E’s loss. It then offered to compensate Mr E 40% of the total loss.
We considered this was fair and encouraged Mr E to accept the offer, which he did.