Partially upheld: unfair claim settlement, underinsurance deductions, claim handling delays complaint against ERGO UK Specialty Limited

Decision detail

Summary

Mr G complained to the FOS about ERGO UK Specialty Limited's handling of a subsidence claim dating from 2018 on his let property. The complaint covered multiple issues including roof repairs, damage to the rear of the property, claim delays, underinsurance deductions, and failure to recover the policy excess. The ombudsman upheld the complaint in relation to underinsurance deductions totalling £217.46 (2019 roof repairs) and £2,680.05 (drain works), finding Mr G and his broker acted in good faith when establishing property value. The ombudsman rejected other aspects, finding Ergo reasonably determined the roof and rear extension were not affected by subsidence based on available evidence, and was not obligated to recover the policy excess from third parties.

The Ombudsman's reasoning

The ombudsman found that while Ergo reasonably changed its position on the roof based on 2023 evidence showing no subsidence damage, and reasonably determined the rear extension and outhouse were not affected by subsidence, Ergo acted unfairly regarding underinsurance deductions. The ombudsman determined that Mr G and his broker acted in good faith using a calculation programme to establish property value, and therefore Ergo could not reasonably rely on underinsurance to limit its liability. Ergo's own final response letter indicated it did not wish to rely on underinsurance, yet it had applied such deductions to both the 2019 roof repairs and drain works. The ombudsman was not persuaded Ergo failed in pursuing the third-party tree owner for excess recovery, as success in such recovery is never assured.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website