Insurers will be unable to reject claims for theft where the car keys have been left in the ignition if policyholders have been left in the dark about the clause, the Financial Ombudsman Service's insurance division has said.

The watchdog warned that if insurers failed to word the exclusion clearly and highlight it to policyholders, the claim would be upheld.

The announcement follows the high-profile case of Hayward vs Norwich Union (NU) after Richard Hayward's £74,000 Porsche was stolen from a garage forecourt.

NU refused to pay out because the keys had been left in the ignition and the Court of Appeal rejected Hayward's appeal against the decision in February.

“This exclusion is now reasonably commonplace but, nonetheless, comes as an unpleasant surprise to most policyholders,” the insurance division wrote in the latest Ombudsman News bulletin.

“We expect insurers to word exclusion clauses clearly in their policies and to highlight them for the policyholder.

“Where they fail to do this, we are unlikely to agree that they are entitled to reject the claim.”