Not upheld: claims handling - alternative accommodation budget exhaustion and service failures complaint against Lloyds Bank General Insurance Limited

Decision detail

Summary

Mr B claimed on his buildings insurance policy with Lloyds following a leak at his property. While the claim was accepted, the alternative accommodation budget was exhausted, leaving Mr B with unpaid expenses. Mr B complained about unnecessary delays and service issues, arguing that poor handling by Lloyds caused the AA budget to be used up prematurely. Lloyds upheld the complaint and offered £1,000 compensation, but Mr B remained dissatisfied and escalated to the FOS. The ombudsman found that although AA communication could have been better, Lloyds did not breach their obligations, as asbestos delays were legitimate and the freeholder's policy subsequently covered costs. The ombudsman upheld Lloyds' £1,000 compensation offer as fair and reasonable, and did not uphold the complaint.

The Ombudsman's reasoning

The ombudsman applied FCA rules requiring insurers to deal with claims promptly and fairly. While acknowledging poor communication and service issues with AA arrangements, the ombudsman found that Lloyds did not breach their obligations. The asbestos discovery was a legitimate cause of delay for which Lloyds was not responsible, and the freeholder's policy subsequently covered AA costs. Mr B's additional financial losses (own asbestos testing, solicitor fees) were incurred without consulting Lloyds and were not Lloyds' responsibility. The £1,000 compensation offered was proportionate to the distress and inconvenience caused by service failures.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website