Not upheld: claim handling delay and loss of rent settlement complaint against Liberty Mutual Insurance Europe SE

Decision detail

Summary

Miss P claimed on her residential property buildings insurance for water damage caused by a leak from an adjoining property. Liberty agreed a cash settlement in February 2021, but repairs were delayed because the neighbour did not repair the leak until 2022. Miss P's tenants moved out in December 2021, and she claimed loss of rental income. Liberty agreed to pay 22 months of lost rental income out of a maximum 24 months available. Miss P requested an additional two months to reach the policy limit, arguing Liberty should continue paying due to claim settlement delays. The ombudsman found Liberty handled the claim reasonably, the delays were caused by the neighbour's failure to repair the leak (not Liberty's responsibility), and the 22-month payment was fair as Miss P had a duty to mitigate losses by re-letting the property once repairs were largely complete in August 2023.

The Ombudsman's reasoning

The ombudsman found that Liberty handled the claim reasonably and made fair settlement offers within reasonable timeframes. The primary cause of delay was the neighbour's failure to repair the leak, which was not Liberty's responsibility. Liberty provided an increased cash settlement promptly once the leak was repaired. The ombudsman considered the 22-month loss of rental income payment fair, as the property was not uninhabitable and Miss P had a duty to mitigate her loss by attempting to re-let the property once repairs were largely complete in August 2023. The ombudsman also clarified that different entities (broker, buildings insurer, legal expenses insurer, and loss assessor) had distinct roles and responsibilities, and Liberty could only be held responsible for its own actions as the buildings insurer.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website