Not upheld: claim declined - insufficient prospects of success complaint against RAC Insurance Limited

Decision detail

Summary

Ms M and Mr J complained that RAC Insurance Limited unfairly declined their legal expenses insurance claim relating to an employment dispute. RAC obtained three separate legal opinions assessing the prospects of success at below the policy requirement of 51%, while Ms M's own solicitor assessed prospects at 60%. RAC sought counsel's opinion which assessed prospects at 10-30%. Although Ms M subsequently settled her claim, the ombudsman found RAC acted fairly in relying on the legal advice obtained and in declining to reimburse costs incurred before the claim was accepted. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that RAC was entitled to rely on the legal advice it obtained from qualified lawyers unless it was obviously wrong. Where conflicting opinions existed, seeking counsel's advice was the appropriate course of action. The ombudsman rejected the argument that the subsequent settlement proved the claim had reasonable prospects of success, noting that settlements can occur for many reasons unrelated to the merits of the claim. The ombudsman also found that RAC was not obliged to reimburse costs that were incurred before the claim was accepted, as per the policy terms.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website