Not upheld: unreasonable claim rejection / policy exclusion application complaint against ARAG Legal Expenses Insurance Company Limited

Decision detail

Summary

L, represented by Mr L, complained that ARAG unreasonably rejected a legal expenses claim against a third party (G) regarding a contract dispute. ARAG initially accepted the claim but declined it after panel solicitors advised it related to intellectual property rights, which was excluded under the policy. The ombudsman found ARAG's decision to decline was reasonable based on the solicitors' professional advice and the policy exclusion wording. Although ARAG should have investigated the intellectual property connection more thoroughly at the outset, the £100 compensation offered was fair, and the complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that ARAG reasonably relied on the panel solicitors' professional advice that the claim related to intellectual property, which fell squarely within the policy exclusion. The exclusion applies to claims 'relating to' intellectual property, not just those about enforcement or ownership. Although ARAG should have identified this connection when Mr L initially mentioned misuse of intellectual property, the £100 compensation adequately reflected this handling error.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website