Not upheld: failure to warn of underwriter change risks and inadequate claims support complaint against Paymentshield Limited

Decision detail

Summary

Mr K and Mrs O complained that Paymentshield changed their home insurance underwriter from Insurer A to Insurer B at renewal without adequately informing them of the risks involved. After renewal, Mr K's water damage claim was declined by Insurer B as pre-policy damage, and he complained that Paymentshield failed to provide support during the dispute. The ombudsman found that Paymentshield's renewal documentation clearly disclosed the underwriter change and explained its annual search for competitive pricing. The ombudsman concluded that Paymentshield was not required to warn of the specific risk of claim denial for pre-policy damage, particularly as continuous cover existed allowing claims under Insurer A. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that renewal documentation clearly informed Mr K of the underwriter change and explained the annual search for cheapest pricing. The ombudsman did not consider it reasonable to expect Paymentshield to warn of the specific risk that a new insurer might decline claims for pre-policy damage, particularly as Mr K had continuous cover and could claim under Insurer A if damage predated Insurer B's policy. The ombudsman concluded any loss or distress resulted from Insurer B's unreasonable claim decline, not Paymentshield's actions. Paymentshield was not required to provide dispute support and reasonably suggested Mr K contact Insurer A.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website