Not upheld: Motor insurance, claim handling complaint against HSB Engineering Insurance Limited

Decision detail

Summary

L and D claimed on their construction insurance policy with HSB for damage to hired plant and unpaid hire charges following a claim by the plant's hirer. HSB declined the claim on the grounds that no valid hiring agreement was in place, as required by the policy terms. L and D argued an informal hiring agreement existed, but the ombudsman found that the terms of this arrangement were disputed and undocumented, with the hirer's litigation alleging the plant was used without permission. The ombudsman upheld HSB's decision, finding it reasonable for the insurer to require clarity on the hiring agreement terms before providing cover, and declined to resolve the disputed contractual terms which would be determined by a court.

The Ombudsman's reasoning

The ombudsman determined that the policy condition requiring legal liability to arise under the terms of a hiring agreement was not met. Although both parties acknowledged an informal hire arrangement existed, the terms of that arrangement were disputed and no written agreement reflected the actual terms in place. Without clarity on what the hiring agreement terms were, and given the disputed nature of the arrangement evidenced by the hirer's claim that the plant was used without permission, it was reasonable for HSB to decline the claim. The ombudsman noted that the purpose of the policy condition was to provide certainty of legal liability and that it was not the ombudsman's role to determine disputed contractual terms that would likely be decided by a court.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website