Not upheld: claim decline - application of policy exclusion complaint against INTACT INSURANCE UK LIMITED trading as NIG

Decision detail

Summary

M, a business, held a commercial vehicle insurance policy with NIG and made a claim for water damage when water from an adjacent canal entered its premises due to retaining wall failure. NIG declined the claim citing a policy exclusion for flood damage. M disputed this, arguing the incident was water ingress rather than a flood, and that reports described it as such. The ombudsman applied the reasonable person test to the undefined term 'flood' and concluded that the substantial water entry from an external source causing significant damage would reasonably be considered a flood by most people. Therefore, the ombudsman upheld NIG's decision to decline the claim.

The Ombudsman's reasoning

The ombudsman applied the reasonable person test to determine the meaning of 'flood' where the policy contained no definition. Considering the substantial amount of water entering from an external source (the canal) and the significant damage caused, the ombudsman concluded that most reasonable people would consider the incident to constitute a flood. Therefore, NIG acted reasonably in declining the claim under the flood exclusion.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website