Upheld: unfair policy administration and indemnity deduction complaint against AmTrust Specialty Limited
Financial Ombudsman decision DRN-6261411 of 2026-04-27T00:00:00+00:00. unfair policy administration and indemnity deduction complaint against AmTrust Specialty Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-6261411 |
|---|---|
| Decision date | 2026-04-27T00:00:00+00:00 |
| Firm | AmTrust Specialty Limited |
| Product | legal expenses insurance |
| Claim type | unfair policy administration and indemnity deduction |
| Outcome | Upheld |
| Remedy | AmTrust must: (1) reinstate the assessment cost to the policy indemnity so it is not deducted from the £10,000 limit; (2) pay simple interest at 8% per annum on the refunded amount from the date Mr B paid it to the date of settlement; (3) pay £250 compensation within 28 days, with 8% simple interest if not paid by the deadline |
Summary
Mr B held a legal expenses insurance policy with AmTrust covering employment disputes with a £10,000 indemnity limit. When AmTrust declined his claim based on lack of reasonable prospects of success, it initially promised to refund the cost of his own legal assessment if it showed otherwise. After Mr B obtained a positive assessment and AmTrust accepted cover, it acknowledged the refund promise was an error but refunded the cost anyway—while deducting it from his policy indemnity limit. The ombudsman upheld Mr B's complaint, finding that costs not covered by the policy should not be deducted from the indemnity limit, and ordered AmTrust to reinstate the amount, pay 8% interest, and provide £250 compensation.
The Ombudsman's reasoning
The ombudsman concluded that while the policy terms did not cover the cost of Mr B's assessment, AmTrust's initial promise to refund it created a reasonable expectation. Since the cost was not covered by the policy, it should not be deducted from the policy indemnity limit. The indemnity limit is intended to cover only expenses expressly stated in the policy terms, and it would be unfair to reduce Mr B's access to this limit due to AmTrust's error in communication. Interest should be paid to reflect the unreasonable delay in payment, and £250 compensation is appropriate for the distress caused by the incorrect advice and subsequent correspondence.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| AmTrust Specialty Limited, all decisions | 140 | 30% |
Source
Read the original decision on the Financial Ombudsman Service website