Not upheld: claims handling error and duplicate settlement payment complaint against Marshmallow Insurance Limited

Decision detail

Summary

Mr M claimed on his motor insurance policy after his car was damaged in an incident deemed a total loss. He chose to retain the salvage, but Marshmallow's claims partner paid the full settlement without deducting salvage value, and Marshmallow then made a second duplicate payment in error. When Marshmallow sought to recover the overpayments, Mr M complained about unclear communications and the service received. The ombudsman found Marshmallow's communications were misleading and its errors caused distress, warranting £425 compensation, but upheld Marshmallow's entitlement to recover overpayments under policy terms and insurance principles, as Mr M had received more than the insured value of his car.

The Ombudsman's reasoning

Although Marshmallow's communications were unclear and misleading, and its administrative errors caused distress, the ombudsman found that under the policy terms Marshmallow was entitled to deduct salvage value from the settlement because Mr M retained the car. The duplicate payment of £2,488.98 was made in error, meaning Mr M received more than the insured value, which is contrary to insurance principles. Therefore, recovery of overpayments was fair and reasonable. The £425 compensation adequately addressed the service shortfall.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website