Not upheld: unfair claim decline - subsidence damage complaint against UK Insurance Limited (trading as NIG)

Decision detail

Summary

Mr K and three other flat owners complained that UKI unfairly declined a subsidence claim on their property insurance policy regarding a deteriorating retaining wall. The property had previously suffered subsidence damage in 2001, with reinstatement works completed in 2004-2005 by a previous insurer. When new damage to the retaining wall was claimed in 2022, UKI declined the claim, stating the damage was due to gradual failure and deterioration rather than subsidence. Mr K argued the damage was a continuation of the earlier subsidence claim and that UKI should be responsible because they took over insurance before the earlier works were completed. The ombudsman found that the technical evidence confirmed the damage was gradual deterioration rather than an insured event, and that UKI did not arrange or assume responsibility for the earlier works, so the claim was fairly declined.

The Ombudsman's reasoning

The ombudsman concluded that the damage claimed was due to gradual deterioration over time rather than an insured peril covered by UKI's policy. While the earlier reinstatement works may have altered the structural behaviour of the wall and contributed to deterioration, UKI did not arrange or complete those works - they were handled by a previous insurer. Therefore, UKI's policy responds only to insured events occurring during UKI's period of insurance, and the gradual damage that developed over time does not constitute a new or distinct insurable event. The ombudsman found no persuasive evidence that UKI assumed responsibility for the earlier works simply by taking over insurance around the time they were completed.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website