Not upheld: settlement amount dispute and VAT reimbursement claim complaint against Aviva Insurance Limited

Decision detail

Summary

Mr F claimed £80,000 VAT reimbursement from Aviva following fire damage to his buildings, arguing the VAT was part of his insured loss and necessary reinstatement costs. Aviva declined, relying on the full and final settlement agreement of £500,000 that Mr F had signed. The ombudsman upheld Aviva's position, finding the settlement agreement was clear and unambiguous, Mr F freely agreed to it with professional representation, and it would be inappropriate to interfere with such an agreement. Additionally, the ombudsman noted that Mr F's VAT claim suggested total work costs of approximately £400,000, meaning he likely suffered no financial loss as this was less than the £500,000 settlement received.

The Ombudsman's reasoning

The ombudsman found the settlement agreement was clear and unambiguous that £500,000 constituted full and final settlement of the buildings claim, with no provision for VAT or further payments. Mr F freely agreed to these terms without evidence of being misled, pressured or coerced. The ombudsman considered that it would be inappropriate to interfere with a clear, valid full and final settlement freely agreed between parties. Additionally, the ombudsman noted that even if interference were appropriate, Mr F appears not to have suffered a financial loss as the total work costs (approximately £400,000) appear to be less than the £500,000 settlement received.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website