Not upheld: claim settlement adequacy and fairness complaint against Lloyds Bank General Insurance Limited

Decision detail

Summary

Mrs S complained that LBGI's settlement offer for a water leak claim was insufficient to carry out necessary repairs. LBGI had initially declined the claim but later reconsidered and offered additional settlement comprising £2,000 for hallway repairs, £3,345 for log burner works, and £2,328.08 for flooring repairs, plus £250 compensation. Mrs S disputed these amounts, arguing her preferred contractors' quotes were significantly higher. The ombudsman found LBGI's settlement fair, applying established principles that cash settlements may be limited to supplier costs when the policyholder elects to use their own contractors. The ombudsman was satisfied the amounts reflected what LBGI would have paid its suppliers and rejected Mrs S's request for disclosure of commercially sensitive supplier schedules.

The Ombudsman's reasoning

The ombudsman applied the established FOS approach to cash settlements in home insurance claims. Where a policyholder elects to use their own contractors, the insurer may limit cash settlement to what it would have paid its own suppliers. The ombudsman found LBGI's amounts were either consistent with supplier costs or accepted Mrs S's contractor costs (log burner), which benefits her. The policy terms explicitly permitted LBGI to use supplier costs for settlement. The ombudsman could not require disclosure of commercially sensitive supplier schedules but was satisfied the £2,000 hallway offer reflected fair supplier costs. The extent of repairs covered was reasonable as it excluded rising damp damage, consistent with the previous decision.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website