Partially upheld: underinsurance and proportional claim settlement; delays and poor communication in claim handling complaint against AmTrust Specialty Limited

Decision detail

Summary

Miss S complained about AmTrust's handling of her home insurance claim following a fire and their decision to settle proportionally due to underinsurance. She had declared a rebuild cost of £300,000 when purchasing the policy in September 2024, but a surveyor's report indicated the true cost was over £945,000. The ombudsman upheld the complaint in part, finding that while AmTrust could fairly apply proportional settlement (41.39%) to repair and reinstatement costs due to Miss S's careless underestimation, they could not apply it to alternative accommodation costs since Miss S was never asked to estimate those. The ombudsman also increased compensation for avoidable delays and poor communication from £500 to £800, and ordered payment of alternative accommodation costs in full up to the policy limit with interest.

The Ombudsman's reasoning

The ombudsman found that Miss S acted carelessly rather than intentionally in underestimating the rebuild cost, as she was clearly directed to tools and information to calculate it accurately. Therefore, AmTrust were entitled to settle repair/reinstatement costs proportionally at 41.39% (based on premium comparison, which is the fair method). However, alternative accommodation costs should not be settled proportionally because Miss S was never asked to estimate those costs - AmTrust calculated the limit automatically as a percentage of the declared rebuild cost. Therefore, Miss S cannot be said to have misrepresented or underestimated accommodation costs and is not underinsured for that element. The avoidable delays and poor communication caused additional distress beyond that caused by the fire itself, justifying increased compensation from £500 to £800.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website