Not upheld: settlement valuation and service delays in claims handling complaint against Fairmead Insurance Limited

Decision detail

Summary

Mr and Mrs P's property was flooded by water from their neighbours' septic tank in November 2022. After the neighbouring property's remedial works were eventually completed (delayed by uncooperative neighbours), Fairmead requested cost breakdowns for repair quotes but did not receive them, leading to a tender process. When Mr and Mrs P sold the property in 2024 before repairs were completed, they requested a cash settlement of £230,000, claiming they had lost money due to the outstanding repairs and delays. Fairmead offered £129,356 based on the most competitive tender quote plus £1,200 compensation for service shortcomings. The ombudsman upheld Fairmead's position, finding the settlement fair as it reflected actual repair costs under the policy terms, and the compensation appropriate for the acknowledged delays and service issues.

The Ombudsman's reasoning

The ombudsman found that Fairmead acted reasonably in requesting cost breakdowns from contractors, reasonable in putting repairs to tender when breakdowns were not provided, and reasonable in basing settlement on the most competitive tender quote. The delay caused by uncooperative neighbours was not Fairmead's fault. While Fairmead acknowledged service shortcomings in later stages, the £1,200 compensation offered aligns with FOS guidance for substantial distress over a sustained period. The policy covers repair costs only, not loss of property value, so the settlement should not be increased to reflect the reduced sale price. Provisional sums in tenders cannot fairly be included as it is now impossible to determine if they would have been payable.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website