Not upheld: Home insurance claim disputes complaint against Liberty Mutual Insurance Europe SE

Decision detail

Summary

Mr A complained that Liberty Mutual unfairly settled his claim for malicious damage and water escape using an average clause that reduced his claim by 43.5%. Liberty had rejected the claim on the basis that Mr A failed to make a fair presentation of risk by understating the property's rebuild value as £50,000 when it was actually approximately £115,000. The Ombudsman found that Mr A had indeed failed to provide a reasonable rebuild value and that Liberty's calculations showing Mr A had paid only 43.5% of the correct premium were accurate. The Ombudsman concluded that Liberty's use of the average clause resulted in either the same or better settlement for Mr A compared to alternative proportionate settlement methods, therefore the settlement was fair and reasonable. The complaint was not upheld.

The Ombudsman's reasoning

The Ombudsman applied the Insurance Act 2015 to assess whether Mr A made a fair presentation of risk. Mr A failed to provide a reasonable rebuild value, having only consulted an estate agent rather than obtaining a proper valuation. Liberty's use of the £115,000 figure across all five similar properties was reasonable. The Ombudsman was satisfied that Liberty's calculations showing Mr A paid 43.5% of the correct premium were accurate. The average clause settlement resulted in either the same or more beneficial outcome for Mr A compared to proportionate settlement under the Insurance Act, therefore Liberty's decision to apply it was fair and caused no detriment to Mr A.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website