Upheld: unfair claim decline based on gradual damage exclusion complaint against Aviva Insurance Limited
Financial Ombudsman decision DRN-6328217 of 2026-04-30T00:00:00+00:00. unfair claim decline based on gradual damage exclusion complaint against Aviva Insurance Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-6328217 |
|---|---|
| Decision date | 2026-04-30T00:00:00+00:00 |
| Firm | Aviva Insurance Limited |
| Product | motor vehicle insurance |
| Claim type | unfair claim decline based on gradual damage exclusion |
| Outcome | Upheld |
| Remedy | Aviva must: (1) settle the water damage claim including any additional damage from the open window; (2) reimburse diagnostic costs of £780 (from 19 November 2024) and £174 (from 12 December 2024) plus 8% simple interest; (3) reimburse transportation costs of £180 (from 22 October 2024), £150 (from 21 November 2024), and £180 (from 12 December 2024) plus 8% simple interest; (4) settle any shortfall in vehicle finance if declared a total loss and GAP cover refuses to assist due to policy expiry; (5) pay £1,000 compensation for inconvenience. |
Summary
J, a company, claimed for water damage to its motor vehicle after it suddenly stopped working. Aviva declined the claim based on a gradual damage exclusion, arguing the water ingress and resulting oxidation occurred over time. The ombudsman found this decline unfair because Aviva's own engineer confirmed the vehicle design concealed the water and the policyholder had no awareness of damage until the vehicle failed. The ombudsman upheld the complaint, requiring Aviva to settle the claim, reimburse diagnostic and transportation costs totalling £1,464 plus interest, cover any GAP insurance shortfall caused by delayed settlement, and pay £1,000 compensation for business inconvenience.
The Ombudsman's reasoning
The ombudsman applied established FOS principles that an insurer cannot fairly rely on a gradual damage exclusion where the policyholder was unaware and could not reasonably have been aware that damage was occurring. Although the damage likely occurred gradually through an unidentified leak, the policy covers all damage unless excluded. Since Aviva's own engineer confirmed the vehicle design concealed the water and the policyholder had no awareness of damage until the vehicle failed, it was unfair for Aviva to decline the claim based on the gradual damage exclusion. The ombudsman also found Aviva should reimburse diagnostic and transportation costs incurred in investigating the claim, cover any GAP insurance shortfall caused by the delayed settlement, and pay compensation for the inconvenience of operating without the vehicle for over a year.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Aviva Insurance Limited, all decisions | 5,098 | 27% |
Source
Read the original decision on the Financial Ombudsman Service website