Not upheld: claim rejection / coverage dispute complaint against HDI Global Specialty SE

Decision detail

Summary

Mrs N claimed on her legal expenses insurance policy after trustees in bankruptcy began investigating the transfer of her matrimonial home and other assets to her name, alleging the transfers were made to place assets beyond creditors' reach. HDI rejected the claim as not covered under the 'Contract' or 'Legal Defence' sections of the policy. The ombudsman upheld HDI's decision, finding that while a dispute existed relating to the home, it arose from Mr N's bankruptcy rather than the transfer agreement itself, and formed part of a wider investigation into multiple assets. The ombudsman also found the agreement lacked consideration and therefore did not meet the definition of a contract, and that trustees in bankruptcy were not a regulatory body for purposes of the 'Legal Defence' cover.

The Ombudsman's reasoning

The ombudsman found that while the dispute did relate to Mrs N's main home and a meaningful connection existed between the property transfer agreement and the subsequent dispute, the dispute did not arise out of the agreement itself but rather from Mr N's subsequent bankruptcy and concerns about his intent to place assets beyond creditors' reach. The dispute was part of a much wider investigation into multiple assets and would likely exist regardless of the matrimonial home transfer. Additionally, the allegation that the property was transferred for no consideration meant the agreement would not meet the legal definition of a contract requiring consideration. The 'Legal Defence' section did not apply because trustees in bankruptcy are not a regulatory body. The ombudsman also noted that defective title cover was provided by a different insurer and HDI had no responsibility to explain that cover.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website