Partially upheld: claims handling - inefficiency and errors in processing third party claim complaint against Marshmallow Insurance Limited

Decision detail

Summary

Mrs M complained about how Marshmallow Insurance handled a third party's claim made in September 2025 relating to an alleged July 2025 incident. Marshmallow acknowledged making errors including failure to cross-reference photographs with an earlier March 2025 claim, delays in processing, and repeatedly requesting information Mrs M had already provided. The claim was ultimately rejected after the third party claimed identity theft in November 2025. Mrs M's premium increased at renewal in October 2025 and she sought compensation beyond Marshmallow's £400 offer. The Ombudsman found Marshmallow's £400 compensation fair and reasonable for the distress caused by its handling errors, but rejected other aspects of the complaint including requests to pursue the third party and claims that the premium increase was Marshmallow's responsibility.

The Ombudsman's reasoning

The Ombudsman found that while Marshmallow made errors in handling the claim (failure to cross-reference images, delays, and repeated requests for information), these errors were unlikely to have affected the premium paid at renewal in October 2025 given the claim was made in September 2025. The Ombudsman determined that Marshmallow acted fairly in rejecting the claim, following its standard process for declined claims, and in exercising its discretion not to pursue the third party. The Ombudsman considered that Marshmallow's errors caused Mrs M distress and inconvenience but was not responsible for the third party's fraudulent claim or impacts on Mrs M's daughter. The £400 compensation offered was deemed fair and reasonable compensation for the distress and inconvenience caused by Marshmallow's specific errors.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website