Partially upheld: claim settlement - underinsurance and proportionate settlement; misleading information about loss adjuster role; claim handling delays complaint against Aviva Insurance Limited

Decision detail

Summary

Mr E and Ms W complained about Aviva's handling of a home insurance claim for storm damage to their roof. Aviva initially declined the claim but later accepted it, then appointed a Loss Adjuster who calculated the rebuild cost at £954,000, significantly higher than the £550,000 Mr E had stated when taking out the policy. Aviva proposed a proportionate settlement based on the proportion of premium paid (43%). The ombudsman found Aviva acted fairly in applying proportionate settlement as Mr E's rebuild cost estimate was unreasonable, but acted unfairly by not explaining the Adjuster's role and causing delays and confusion. The complaint was partially upheld, with the ombudsman directing Aviva to pay the £750 compensation it had already offered.

The Ombudsman's reasoning

The ombudsman found that Mr E's stated rebuild cost of £550,000 was not reasonable given the property valuation evidence and the lack of documented basis for the calculation. The BCIS-calculated figure of £954,000 was more persuasive as it used a tool designed to establish rebuild value. Therefore, Aviva was entitled to apply proportionate settlement under the policy terms. However, Aviva acted unfairly by not explaining the Adjuster's role in assessing sum insured, creating misleading expectations. Additionally, Aviva caused avoidable confusion about the contractor's site visit and significant delay through the initial claim decline. These failures justified compensation for distress and inconvenience, but did not prevent Aviva from exercising its right to proportionate settlement.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website