Not upheld: Home insurance claim disputes complaint against Zurich Insurance Company Ltd

Decision detail

Summary

Mr L claimed on his rental property's buildings insurance for water damage caused by blocked drainage in September 2024. The claim was initially registered under the liability section by the freeholder in November 2024, but Zurich did not recognise it should fall under the buildings insurance section until February 2025 and took no action until May 2025. Mr L had already completed repairs and paid the contractor (£19,965) before Zurich could validate costs. Zurich obtained a retrospective quote showing the work should have cost around £5,107 and offered settlement based on this lower figure, plus £500 compensation for the processing delay. Mr L disputed the settlement as unfair, but the ombudsman found Zurich acted reasonably given it had no opportunity to pre-validate costs and was entitled to assess whether claimed costs were reasonable.

The Ombudsman's reasoning

The ombudsman found that Zurich had no opportunity to validate costs before repairs commenced, as payment was made to the contractor about a day after Zurich sent the claim form and the work was already underway when Zurich chased for the completed form in December 2024. The ombudsman considered Zurich entitled to validate costs under the policy and found the significant difference between Mr L's claimed costs (£19,965) and Zurich's comparative quote (£5,107) justified its conclusion that the costs were excessive and unreasonable. The £500 compensation offered for the delay in recognising the correct policy section was deemed adequate recognition of inconvenience.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website