Upheld: unfair claim settlement / inadequate indemnity complaint against Fortegra Europe Insurance Company Ltd

Decision detail

Summary

Ms W claimed under her extended warranty for damage to sofas that could not be repaired. Fortegra offered either a reselection voucher (limited to the original retailer) or 50% cash settlement, but the original retailer no longer stocked suitable replacements. The ombudsman upheld Ms W's complaint, finding that the policy terms require replacement with items of similar standard, specification and style, and that Fortegra's offers did not provide adequate indemnity. The ombudsman ordered Fortegra to pay the full original purchase price of £2,544 in cash.

The Ombudsman's reasoning

The ombudsman applied the principle that insurance claim settlements should put the claimant back in the position they were in before the loss, or as closely as possible. The policy terms require replacement with items of similar standard, specification and style. Since Fortegra's settlement options (reselection voucher or 50% cash) would not allow Ms W to obtain a suitable replacement, they do not provide adequate indemnity and breach the policy terms. While reselection vouchers through original retailers are common practice, they can only be fair where they provide adequate indemnity in line with policy terms, which they do not here.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website