Partially upheld: Home insurance claim disputes complaint against Liberty Mutual Insurance Europe SE
Financial Ombudsman decision DRN-3665669 of 2022-09-23T00:00:00+00:00. Home insurance claim disputes complaint against Liberty Mutual Insurance Europe SE. Outcome: Partially upheld.
Decision detail
| Reference | DRN-3665669 |
|---|---|
| Decision date | 2022-09-23T00:00:00+00:00 |
| Firm | Liberty Mutual Insurance Europe SE |
| Product | Other regulated product |
| Claim type | Home insurance claim disputes |
| Outcome | Partially upheld |
| Remedy | Liberty Mutual must assess and pay D's business interruption claim based on the Compulsory Closure extension. If any settlement is due, Liberty Mutual must pay it with 8% simple interest per annum from the date settlement ought reasonably to have been made (calculated from late May 2020 for the first monthly instalment, with subsequent instalments in June and July 2020) to the date payment is made. Settlement should be made in three monthly instalments corresponding to the three-month period of cover. |
Summary
D, a licensed restaurant, held business interruption insurance with Liberty Mutual and submitted a claim in March 2020 after being forced to close due to COVID-19 restrictions. Liberty Mutual initially declined the claim, but the FOS Investigator recommended it should be upheld. Liberty Mutual did not agree until January 2022. Mrs A then claimed consequential losses resulted from the delay in settlement. The ombudsman partially upheld the complaint, requiring Liberty Mutual to pay the claim with 8% simple interest from when it ought to have been settled, but rejected the consequential loss claims. The ombudsman found that even timely payment would not have prevented D's financial difficulties, as these were caused by the pandemic, fixed costs, reopening expenses, and a subsequent flood rather than the delayed claim settlement.
The Ombudsman's reasoning
The ombudsman upheld the initial complaint that Liberty Mutual should have met the claim, which Liberty Mutual eventually accepted. However, the ombudsman rejected claims for consequential losses caused by the delay in settlement. The ombudsman reasoned that even if settlement had been made when it ought to have been (May-July 2020), the funds would not have been sufficient to prevent D's financial difficulties. The COVID-19 pandemic restrictions, fixed business costs, reopening costs, and subsequent flood damage were independent of Liberty Mutual's handling of the claim. The ombudsman concluded that third parties' lending decisions and D's inability to reopen were not caused by the delayed claim settlement. The 8% simple interest award was deemed appropriate compensation for the delay.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Liberty Mutual Insurance Europe SE, all decisions | 46 | 32% |
| Home insurance claim disputes, all decisions | 25,340 | 38% |
| Other regulated product, all decisions | 51,105 | 30% |
Source
Read the original decision on the Financial Ombudsman Service website