Upheld: claim rejection without proper investigation; improper reliance on policy exclusion complaint against RAC Insurance Limited
Financial Ombudsman decision DRN-6428788 of 2026-06-15T00:00:00+00:00. claim rejection without proper investigation; improper reliance on policy exclusion complaint against RAC Insurance Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-6428788 |
|---|---|
| Decision date | 2026-06-15T00:00:00+00:00 |
| Firm | RAC Insurance Limited |
| Product | Motor insurance |
| Claim type | claim rejection without proper investigation; improper reliance on policy exclusion |
| Outcome | Upheld |
| Remedy | RAC Insurance Limited must: (1) reconsider the claim in line with policy terms following a full investigation and review, which should include obtaining evidence of the car's condition at the time of incident (warning lights, etc.), engineering evidence, and Miss S's repair invoice; (2) pay Miss S £100 compensation for distress, inconvenience, and frustration caused by its failure to investigate, payable within 28 days plus interest at 8% per annum simple if paid late. |
Summary
Miss S's car broke down in Europe in October 2025 with loss of power. After an initial call to RAC was cut off due to poor reception and subsequent callback attempts failed, Miss S drove the car approximately 25-30 minutes to reach a service station with better signal, where she contacted RAC again. RAC rejected her claim based on a policy exclusion for vehicles not in good enough condition to be legally driven, but provided no evidence to support this determination. The ombudsman upheld Miss S's complaint, finding that RAC failed to conduct a proper investigation before rejecting the claim and should have obtained engineering evidence and other documentation. RAC was ordered to reconsider the claim following a full investigation and to pay £100 compensation for the distress and inconvenience caused by its failure to investigate properly.
The Ombudsman's reasoning
The ombudsman found that RAC failed to conduct a proper investigation before rejecting the claim. While RAC relied on a policy exclusion for vehicles not in good enough condition to be legally driven, it provided no evidence to support this (such as warning lights, critical failures, or loss of control). The ombudsman noted that without engineering evidence, it cannot be determined whether Miss S's continued driving caused further damage or what the vehicle's condition was at the initial breakdown. The ombudsman considered Miss S's circumstances reasonable — she had no signal, felt unsafe staying in the original location, and was travelling with a severely disabled child. The ombudsman concluded that RAC should have investigated properly before rejecting the claim, and that its failure to do so caused distress and inconvenience warranting £100 compensation. The question of repair cost reimbursement must be determined after RAC completes its proper investigation.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| RAC Insurance Limited, all decisions | 226 | 34% |
| Motor insurance, all decisions | 23,874 | 35% |
Source
Read the original decision on the Financial Ombudsman Service website