Not upheld: underinsurance and proportionate claim settlement complaint against AmTrust Specialty Limited

Decision detail

Summary

Mr W claimed on his property insurance policy for malicious damage with repair quotes of approximately £23,000. AmTrust's loss adjuster determined the property was underinsured, with a sum insured of £51,000 against a rebuild cost of approximately £200,000 based on BCIS calculations. AmTrust applied a proportionate settlement of £7,253.91 (approximately 31% of the claim). Mr W disputed this, arguing the rebuild cost was lower based on a 2019 survey (£115,000) and ABI calculator (£170,000). The ombudsman upheld AmTrust's settlement, finding the property was materially underinsured under any reasonable rebuild cost estimate and that Mr W failed to make a fair presentation of risk under the Insurance Act 2015. The £250 compensation for service delays was also upheld as reasonable.

The Ombudsman's reasoning

The ombudsman concluded that the property was materially underinsured regardless of which rebuild cost estimate was used. Even using Mr W's lower figure of £170,000, the property remained significantly underinsured compared to the £51,000 sum insured. AmTrust's BCIS calculation based on actual property measurements was more reliable than Mr W's estimates, which were acknowledged as estimates based on assumptions with limited information. Under the Insurance Act 2015, Mr W failed to make a fair presentation of risk by not disclosing the correct rebuild cost. AmTrust was therefore entitled to apply proportionate settlement based on the premium differential. The £250 compensation for service delays was proportionate and reasonable.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website