Not upheld: claim decline based on breach of policy conditions complaint against Society of Lloyd's (SOL)

Decision detail

Summary

D, a furniture workshop operator, claimed for fire damage under its Commercial Combined Insurance policy with SOL. SOL declined the claim, relying on breaches of the Daily Waste Condition and Woodworking Conditions, which required removal of combustible trade waste and wood dust daily. The forensic investigator found combustible wood dust beneath the extraction unit that appeared to have remained from the previous working day. D disputed this, claiming the workshop was cleaned before Christmas closure and the dust was brought in on the day of the fire. The ombudsman found it more likely than not that at least some wood dust had remained in breach of policy conditions and that SOL was entitled to rely on this breach under the Insurance Act 2015, as the conditions were designed to reduce fire risk. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found it more likely than not that at least some combustible wood dust had remained in the workshop from the previous working day in breach of policy conditions. While D's explanation about dust being brought in on the day of the fire was considered, the investigator's physical observations of a notable accumulation of wood dust beneath the extraction unit, combined with the lack of machinery use that morning, supported the conclusion of non-compliance. Under Section 11 of the Insurance Act 2015, SOL was entitled to rely on the breach because the policy conditions were specifically intended to reduce fire risk, and combustible materials could increase the risk of fire damage occurring, even if the wood dust itself did not directly ignite.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website