Upheld: claim decline and misapplication of policy terms complaint against AXA Insurance UK Plc

Decision detail

Summary

R, a property freeholder, claimed on its AXA insurance policy for damage including broken water pipes, mould, building cracks, and damp. AXA declined the claim after investigations found no water leaks causing the damage. R complained that AXA had not sufficiently investigated the cause of damage. The ombudsman upheld the complaint, finding that AXA misapplied its all-risks policy by focusing on insured perils rather than damage itself. The ombudsman required AXA to accept claims for mould, building cracks, and underground pipe damage, and to reconsider its liability for damp damage in light of other defined perils and prior leak evidence.

The Ombudsman's reasoning

The ombudsman found that AXA misapplied its policy by focusing on whether damage was caused by insured perils rather than recognizing that the policy covers 'damage' as an all-risks policy. Since damage (cracked pipes, mould, building cracks) was identified, AXA bore the burden of proving a relevant exclusion applied. No exclusions existed for cracked pipes, mould, or building cracks. For damp, the exclusion only applies if damage is not caused by a defined peril. AXA failed to consider all water-based perils and prior leak evidence when assessing damp damage, requiring reconsideration.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website