Upheld: unfair reliance on policy exclusion clauses (theft by fraud and storage ashore exclusions) complaint against Society of Lloyd's
Financial Ombudsman decision DRN-6220210 of 2026-05-19T00:00:00+00:00. unfair reliance on policy exclusion clauses (theft by fraud and storage ashore exclusions) complaint against Society of Lloyd's. Outcome: Upheld.
Decision detail
| Reference | DRN-6220210 |
|---|---|
| Decision date | 2026-05-19T00:00:00+00:00 |
| Firm | Society of Lloyd's |
| Product | marine insurance |
| Claim type | unfair reliance on policy exclusion clauses (theft by fraud and storage ashore exclusions) |
| Outcome | Upheld |
| Remedy | Society of Lloyd's must settle the claim in accordance with the remaining terms of the policy. Interest at 8% simple per annum must be paid from the date the claim was initially declined to the date of payment. No additional compensation for distress and inconvenience was awarded. |
Summary
Ms M claimed on her marine insurance policy for the theft of her boat engine, which was stolen by Mr H after being collected from a marine engineer where it was being repaired. Society of Lloyd's declined the claim, relying on exclusion clauses for 'theft as a result of fraud' and theft of items not securely fastened or in locked compartments. The ombudsman found that SOL failed to prove fraud occurred, as Mr H was charged with theft not fraud, there was no evidence of dishonest representation or pre-meditation, and Ms M had acted reasonably in instructing a previously trusted individual to collect the engine. The storage ashore exclusion also did not apply as the policy permitted storage with an engineer. The complaint was upheld and SOL was ordered to settle the claim with interest.
The Ombudsman's reasoning
The ombudsman applied the principle that insurers bear the burden of proof when relying on exclusion clauses. For the 'theft as a result of fraud' exclusion to apply, SOL needed to demonstrate that fraud more likely than not occurred. The ombudsman found insufficient evidence of fraudulent intent, dishonest representation, or pre-meditation. The engine was lawfully stored ashore with an engineer, which fell within the policy's coverage for storage ashore, negating the second exclusion clause. The evidence suggested either an opportunistic theft or impulsive act rather than a calculated fraud.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Society of Lloyd's, all decisions | 596 | 32% |
Source
Read the original decision on the Financial Ombudsman Service website