Upheld: unfair claim decline / misapplication of policy terms complaint against UK Insurance Limited (marketed by Direct Line)

Decision detail

Summary

Ms S and Mr W claimed for emergency boiler repairs in May 2025. UKI declined the claim, stating the boiler was uneconomical to repair due to extensive internal corrosion and unavailable replacement parts. Ms S and Mr W arranged their own repair for £836.40 (pump replacement) and complained to UKI, then escalated to the FOS. The Ombudsman found UKI misapplied its policy terms: the repair cost was substantially less than the replacement cost (£1,964.39-£3,755), so the boiler was not uneconomical to repair. The corroded casing was not required for a lasting and effective repair, as evidenced by the boiler's trouble-free operation since repair. The Ombudsman upheld the complaint and directed UKI to reimburse £836.40 plus 8% interest.

The Ombudsman's reasoning

The policy clearly defines 'uneconomical to repair' as any repair costing more than replacement. The repair cost of £836.40 was substantially less than the replacement cost (£1,964.39 excluding labour, or £3,755 including labour), so the boiler was not uneconomical to repair under the policy terms. While the casing was corroded, there is no policy term permitting decline based on boiler condition or unavailable non-essential parts. The pump replacement achieved a lasting and effective repair, as evidenced by the boiler's trouble-free operation since repair and the prior gas safety inspection finding no issues. UKI applied internal criteria not reflected in the policy terms.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website