Partially upheld: Motor insurance, claim handling complaint against AmTrust Specialty Limited trading as Amtrust Europe Limited

Decision detail

Summary

Mr T complained that AmTrust unfairly withdrew cover for a legal expenses insurance claim after initially accepting it and instructing solicitors to pursue legal action against a third party for unpaid rent and possession recovery. AmTrust withdrew cover after a second firm of solicitors obtained a barrister's opinion concluding the tenancy agreement did not meet the policy's definition of covered tenancies. The ombudsman found that while AmTrust's decision to withdraw cover was reasonable and properly based on legal advice, AmTrust should have identified the coverage issue much earlier when tenancy details were first provided, rather than allowing legal action to commence. The complaint was partially upheld and £200 compensation was awarded for the distress and inconvenience caused by the poor claim handling and delayed identification of the coverage gap.

The Ombudsman's reasoning

While AmTrust was entitled to withdraw cover once it established the claim was not covered by the policy terms and conditions, the ombudsman found that AmTrust should have identified this issue much earlier. The tenancy details were provided to AmTrust and the initial solicitors, yet no assessment was carried out before legal action commenced. Although Mr T benefited from initial funded legal work before the issue was identified, he suffered distress and inconvenience from the unexpected withdrawal of cover and the difficult position it left him in regarding how to proceed with the legal action.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website