Not upheld: unfair claim settlement due to underinsurance complaint against INTACT INSURANCE UK LIMITED

Decision detail

Summary

M, a limited company, complained that Intact unfairly settled a fire damage claim by applying underinsurance calculations based on declared values rather than the uplifted sums insured. M claimed £69,645.59 for tenant's improvements (declared at £57,393) and £35,813.79 for contents (declared at £31,886). Intact settled the tenant's improvements at the full declared value but applied an average calculation to contents, paying £26,283.47. M also complained about three months of delays in settlement. The ombudsman found that M had failed to provide accurate declared values reflecting true rebuild costs and that Intact's policy terms clearly supported the underinsurance settlement approach. The ombudsman also found the £450 compensation for delays to be adequate and did not uphold the complaint.

The Ombudsman's reasoning

The ombudsman found that M failed to make a fair presentation of risk by providing insufficient declared sums. The policy terms clearly supported Intact's decision to apply underinsurance proportionately. While the complaint was against Intact rather than the broker Company A, the ombudsman noted that any issues with how the broker presented the requirement for declared values fell outside the scope of this complaint. Intact's average calculation method was actually more favourable to M than the typical proportionate settlement approach, so the ombudsman would not interfere. Regarding service delays, the ombudsman was limited in awarding compensation to a limited company entity and found the £450 already paid to be adequate.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website