Not upheld: Travel / life insurance claim disputes complaint against Arch Insurance (UK) Limited

Decision detail

Summary

Mr W claimed on his mortgage payment protection insurance policy for unemployment after his employment ended via a settlement agreement in March 2025. Arch declined the claim on the basis that the policy only covers unemployment arising from circumstances beyond the policyholder's control, and a settlement agreement represents mutual agreement to part ways. The ombudsman upheld Arch's decision, finding that while settlement agreements can sometimes mask involuntary job loss, Mr W had not provided sufficient documentary evidence to demonstrate he had no choice in accepting the agreement. The ombudsman found Arch's enquiries were reasonable and that the policy terms clearly exclude voluntary departures from employment.

The Ombudsman's reasoning

The ombudsman found that the policy terms clearly require unemployment to be 'directly due to circumstances beyond your control' and that settlement agreements, by their nature, represent mutual agreement between employer and employee. While acknowledging that settlement agreements can sometimes mask involuntary job loss, the ombudsman concluded that Arch had made reasonable enquiries to investigate the circumstances but Mr W had not provided sufficient documentary evidence to demonstrate he had no choice in accepting the settlement. The ombudsman rejected the argument that the confidentiality clause should prevent Arch from requiring supporting information, and found that Mr W had an alternative option (tribunal) even if unattractive. The ombudsman also noted that Arch was entitled to make commercial decisions about what risks to cover and that the policy's exclusion of voluntary departures was not uncommon.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website