Not upheld: unreasonable claim rejection / policy exclusion application complaint against ARAG Legal Expenses Insurance Company Limited

Decision detail

Summary

L, a company, complained that ARAG Legal Expenses Insurance Company Limited unreasonably declined a legal expenses claim against a third party. ARAG initially accepted the claim but, after panel solicitors advised it related to intellectual property rights, declined it under the policy's intellectual property exclusion. Mr L argued the claim was purely contractual and unrelated to intellectual property enforcement. The ombudsman found ARAG reasonably relied on the solicitors' expert assessment and that the claim did relate to intellectual property, making the exclusion applicable. Although ARAG should have identified the exclusion earlier, the £100 compensation offered for this initial mishandling was deemed fair, and the complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found it reasonable for ARAG to rely on the panel solicitors' expert assessment that the claim related to intellectual property, which falls squarely within the policy's exclusion for claims 'relating to patents, copyrights, trademarks, merchandise marks, registered designs, intellectual property, secrecy and confidentiality agreements.' Although the claim was framed as a breach of contract, the underlying subject matter concerned intellectual property rights over photos. The ombudsman rejected Mr L's argument that the exclusion was ambiguous, finding the wording clear. ARAG's error was in initially accepting the claim without identifying the exclusion, which it acknowledged and remedied with £100 compensation.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website