Upheld: unfair cost recovery and claims handling complaint against Watford Insurance Company Europe Limited

Decision detail

Summary

Mr M complained about Watford Insurance Company Europe Limited's attempt to recover approximately £16,500 in costs from him following settlement of two motor insurance claims arising from accidents in November 2024. Although Watford's liability decisions for both claims were found to be fair and reasonable, the Ombudsman upheld the complaint because Watford lacked contractual grounds to pursue cost recovery. The policy's 'Right of Recovery' clause only permits recovery of payments made outside policy terms due to legal obligations or Motor Insurers' Bureau agreements, neither of which applied since Watford settled the claims under the policy terms. The Ombudsman directed Watford to cease pursuing Mr M for cost recovery.

The Ombudsman's reasoning

The Ombudsman found that while Watford's liability decisions were fair and reasonable based on the evidence available, they had no contractual right to recover costs from Mr M. The policy's 'Right of Recovery' clause only permits recovery of payments made outside the policy terms due to legal obligations or Motor Insurers' Bureau agreements. Since Watford settled the claims under the policy terms (not due to legal obligation or RTA requirements), and there is no policy term allowing recovery simply because liability was conceded, Watford cannot pursue Mr M for the costs they paid.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website