Final Ruling Against King Price Insurance Company Ltd

Inconsistent communication about cover results in premium refund

When an insurer changes the scope of cover, clear and accurate communication is essential.

King Price Insurance Company Ltd (King Price) first endorsed an insured’s policy to impose an additional excess for claims caused by acts of nature.

On 12 March 2024, King Price issued a notice informing the insured that his policy would be endorsed to exclude cover for loss caused by acts of nature, including storm, wind, lightning, hail, flood, snow and earthquake, with effect from 1 May 2024.

Shortly after receiving notice of the new endorsement, the policyholder telephoned King Price to establish what cover would remain and whether the removal of acts-of-nature cover would result in a reduction of his premium.

The consultant undertook to obtain the necessary authorisation and confirm the position by email. Later that day, she sent an email listing the risks for which the insured remained covered. Next to acts of nature, she inserted the words “still covered but with a higher excess”.

The consultant also indicated that she would revert after consulting King Price’s ratings and underwriting departments regarding the premium. She did not do so. The premium was not reduced and was subsequently increased when the policy was renewed.

In March 2025, the property was damaged during a storm. King Price rejected the claim on the basis that the endorsement excluded cover for damage caused by acts of nature.

The insured approached the NFO for assistance. He did not ask King Price to indemnify him for the storm damage. Instead, he sought a refund of the premiums for the buildings section of the policy paid between 1 May 2024 and 31 March 2025.

He submitted that the consultant’s written assurance had led him to believe that cover for acts-of-nature remained in place, subject only to a higher excess. Had he been correctly informed that this cover had been excluded, he would not have continued paying the full premium and would have considered obtaining alternative insurance.

The complaint was initially dismissed after the adjudicator concluded that there had been no meeting of the minds between the parties. The matter was subsequently escalated and reconsidered by the Non-life Insurance Division’s Escalation Committee (the Committee).

The Committee issued a Provisional Ruling in favour of the insured. The Committee considered that a reasonable person reading the consultant’s email would understand that cover for acts-of-nature remained in place, subject to a higher excess.

The Committee found that the email from the consultant could not be considered in isolation. It had been sent after the policyholder had queried the effect of the endorsement, after the consultant had undertaken to consult internally and after she had told him that the answer to his enquiry would not appear on the policy schedule.

The Provisional Ruling recommended that King Price refund the buildings-section premiums paid between 1 May 2024 and 31 March 2025.

King Price did not accept the Provisional Ruling and made further submissions in support of its position. It argued that the insured understood the endorsement during the recorded call and had subsequently received several policy schedules reflecting the endorsement. King Price maintained that the consultant’s email contained an error and that the policyholder could not reasonably continue relying on it once he received the later schedules which still contained the endorsement.

The Committee was not persuaded. It found that the written assurance had been given in direct response to the insured’s enquiry. The Committee also considered the insured’s reliance on the email to be reasonable, particularly because he had been told that the answer to his enquiry would not appear on the policy schedule but would be provided by email.

In its Final Ruling, the Committee directed King Price to refund the premiums for buildings between 1 May 2024 and 31 March 2025. It found that King Price had not proved that the disputed wording was included accidentally. In any event, even if it had been an error, the misstatement had caused the insured to continue paying the full premium. As King Price maintained that the acts-of-nature portion could not be separated from the buildings premium, the Committee considered a refund of the full buildings premium for the relevant period to be the appropriate remedy.

King Price applied to the Appeal Tribunal for leave to appeal the Final Ruling. Among other grounds, it challenged the findings concerning the consultant’s email, the reasonableness of the insured’s reliance on it and the measure of the relief granted.

The Appeal Tribunal found that King Price’s explanation for the email was an inference rather than proof of what had occurred. There was no statement from the consultant, supporting internal record or contemporaneous correction. The Tribunal also found that the insured’s reliance on the written assurance was reasonable in the particular circumstances and that the refund was a practical remedy where King Price had not proposed an alternative method of calculating the financial loss.

The Appeal Tribunal declined the insurer’s application for leave to appeal. King Price subsequently complied with the Final Ruling.

This matter highlights the importance of accurate and consistent communication when an insurer changes the scope of cover. Although a policy schedule remains an important record of the cover provided, it cannot necessarily be considered in isolation where a policyholder has raised a direct enquiry and has received a specific written response from the insurer.

The ruling does not establish that written correspondence will always prevail over a policy schedule. The outcome depended on the particular facts: the policyholder had asked King Price to clarify the endorsement, the consultant had directed him away from the schedule as the source of the answer, she had undertaken to confirm the position in writing, and the written assurance had not been corrected.

Ms Nadia Gamieldien

Senior Adjudicator and Ombud – Non-life Insurance Division

Member of the Escalation Committee

Contact details for the NFO:

Telephone: 0860-800-900