Upheld: unfair claim decline / misapplication of policy exclusions complaint against MSIG Europe SE

Decision detail

Summary

Mr G claimed on his marine insurance policy after his moored boat partially sank due to failed gearbox bellows in 2023. MSIG declined the claim, relying on policy exclusions including one for gradual deterioration. The ombudsman upheld the complaint, finding that while gradual deterioration likely occurred, MSIG failed to satisfy both conjunctive requirements of the exclusion: it could not show the deterioration would have been identifiable by routine inspection (the part was concealed and required specialist dismantling), nor could it prove that manufacturer-recommended servicing or replacement would have prevented the failure (MSIG could not establish the actual manufacturer or that the boat had run 300 hours). The ombudsman required MSIG to accept and settle the claim and pay £500 compensation.

The Ombudsman's reasoning

The ombudsman applied the principle that the insurer must prove it can reasonably rely on an exclusion to defeat a claim. For the gradual deterioration exclusion to apply, MSIG had to prove two conjunctive requirements: (1) the deterioration could have been identified by routine inspection, and (2) servicing, maintenance or replacement in accordance with manufacturer instructions could have prevented it. On the first requirement, the ombudsman found the bellows were relatively concealed in situ, specialist dismantling was needed for full assessment, and a visual inspection in February 2025 revealed no concerns, so MSIG failed to show deterioration would have been evident on routine inspection. On the second requirement, MSIG could not establish the actual manufacturer, could not prove the boat had reached the 300-hour replacement threshold, and the manufacturer's guidance indicated that visual inspection constitutes servicing. Therefore, MSIG failed to establish that replacement would have been required before failure. The ombudsman also dismissed three other exclusions as inapplicable. The water ingress was unforeseen and accidental, and the ombudsman found no evidence it was foreseeable.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website