Upheld: improper claim settlement and excess deduction complaint against Lloyds Bank General Insurance Limited

Decision detail

Summary

Mr H claimed on his home contents insurance policy for a damaged laptop and mobile phone in July 2025. Lloyds initially indicated it would replace the laptop and repair the phone, but later said the combined cost exceeded the £2,000 policy limit. Lloyds paid £1,900 (deducting the £100 excess from the limit) and required Mr H to pay £624 for phone repair. Mr H subsequently obtained a new phone contract and complained about the settlement. The ombudsman found Lloyds had incorrectly deducted the excess from the policy limit rather than from the claim value, entitling Mr H to an additional £100 payment. The ombudsman rejected claims for phone repair costs and monthly phone payments as not covered by the policy, and awarded £100 additional compensation for distress and inconvenience caused by poor service and miscommunication.

The Ombudsman's reasoning

The ombudsman found that Lloyds incorrectly deducted the £100 excess from the policy limit settlement. Under the policy terms, the correct approach was to deduct the excess from the claim value first, then apply the policy limit. The claim value exceeded the £2,000 limit even after deducting the excess, so Mr H was entitled to the full £2,000. The ombudsman rejected the claim for monthly phone payments as this was not covered by the policy and Mr H had not demonstrated this was a loss caused by Lloyds' failings. The ombudsman found the two-month settlement period was reasonable given the need to investigate and obtain repairer assessment, though there was some poor service and miscommunication. The ombudsman considered £100 additional compensation fair for the distress and inconvenience caused.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website