Not upheld: business interruption claim calculation and settlement complaint against Arch Insurance (UK) Limited

Decision detail

Summary

T Ltd, a motor trader, claimed business interruption losses of approximately £25,000-£52,000 following damage to its vehicles in November 2024, but Arch Insurance settled the claim at £3,102 based on a turnover reduction of £18,250 and 17% gross profit rate. T Ltd disputed the calculation methodology, arguing the policy formula did not reflect actual losses and that the indemnity period should extend beyond February 2025 due to inability to reinvest in stock. The ombudsman found that Arch applied the policy terms fairly, made reasonable adjustments for the documented business growth from mid-2024 stock investment, and correctly determined the indemnity period ended when all damaged vehicles were repaired. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that Arch applied the policy terms fairly and made reasonable adjustments to account for the upward business trend following the mid-2024 stock investment. The policy's definition of gross profit and settlement formula are standard and not inherently unfair. The indemnity period correctly extended until all damaged vehicles were repaired and available for sale. The car sold at a reduced price was properly included in the overall loss calculation for the period. Issues regarding provision of policy information at sale should be addressed with the broker, not the insurer.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website