Not upheld: claim settlement under underinsurance clause; claim handling delays and communication complaint against Covea Insurance plc

Decision detail

Summary

G, a limited company owning a residential property, claimed for escape of water damage under its property owners insurance policy with Covea. Covea discovered the property was underinsured (sum insured £534,821 versus fair estimate £692,849) and settled the claim proportionally at 83.45%. Mr K, G's director, disputed the underinsurance settlement, claim handling delays, and additional repair cost decisions. The ombudsman found G failed to make a fair presentation of risk under the Insurance Act 2015, Covea's proportional settlement was fair, and claim handling was reasonable. The complaint was not upheld, and no compensation was awarded as G is a legal entity rather than a person.

The Ombudsman's reasoning

The ombudsman found that G, as a limited company, is a commercial customer subject to the Insurance Act 2015, which imposes a duty on the insured to make a fair presentation of risk. G failed to take reasonable care in determining the sum insured, relying on index-linking without proper enquiry or discussion with the broker. Covea's proportional settlement at 83.45% was fair and reasonable, being calculated on the difference in premiums rather than sum insured, which benefited G. The claim handling involved reasonable delays for quote validation and cost review. No compensation could be awarded as G is a legal entity rather than a person and therefore cannot suffer non-financial loss such as distress or inconvenience.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website