Not upheld: wrongful claim decline and delay in claim acceptance complaint against ARAG Legal Expenses Insurance Company Limited

Decision detail

Summary

T, a sole trader, complained that ARAG wrongly declined a legal expenses insurance claim in March 2025 and later a second claim in September 2025, causing considerable financial losses and business failure. ARAG acknowledged the errors and offered £300 compensation. The ombudsman found that while ARAG's initial declinatures were wrong, there was insufficient evidence that these actions directly caused T's claimed losses, and T had a duty to mitigate by seeking alternative legal assistance. The ombudsman upheld ARAG's £300 compensation as adequate and did not uphold the complaint.

The Ombudsman's reasoning

Although ARAG wrongly declined the claim initially, the ombudsman found no persuasive evidence that ARAG's actions directly caused the financial losses T claimed. The ombudsman noted that T had a duty to mitigate its loss and could have sought legal assistance independently or pursued matters without representation if the situation was truly urgent. No legal opinion was provided to support that urgent action was necessary or that T lost the opportunity to bring claims against the landlord. The £300 compensation was deemed appropriate for the distress and inconvenience caused by the wrongful declinatures.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website