Not upheld: claims handling, withdrawal of cover, cost recovery complaint against ARAG Legal Expenses Insurance Company Limited

Decision detail

Summary

Mr and Mrs S complained to ARAG about its handling of a legal expenses insurance claim relating to a property purchase dispute. ARAG initially withdrew cover in 2017 based on panel solicitors' advice, then reinstated it after Mr S obtained a supportive valuation report in 2020. ARAG subsequently withdrew cover again based on counsel's opinion in June 2021 that the claim lacked reasonable prospects of success. Mr S argued the counsel's opinion was flawed because it relied on inaccurate valuation evidence. Additionally, ARAG initially sought to recover expert report costs from Mr S but later acknowledged providing inaccurate information about this. The ombudsman found ARAG's reliance on counsel's opinion was reasonable and the £300 compensation for the cost recovery issue was fair, resulting in the complaint not being upheld.

The Ombudsman's reasoning

The ombudsman found that ARAG was entitled to rely on counsel's properly written and reasoned opinion from a suitably qualified specialist in professional negligence and property litigation. The counsel's opinion did not reference the original valuation information that Mr S claimed was inaccurate, and instead focused on breach of duty and causation. The ombudsman rejected Mr S's argument that the opinion should not be relied upon because it took into account inaccurate valuation evidence. Regarding the cost recovery issue, while ARAG provided inaccurate information and caused distress, the £300 compensation was deemed proportionate to the nature and extent of the distress caused.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website