Not upheld: Travel / life insurance claim disputes complaint against ARAG Legal Expenses Insurance Company Limited

Decision detail

Summary

Mr W and Mrs C complained to the FOS about ARAG's decision to decline a legal expenses insurance claim relating to a contract dispute with a damp proofing specialist. The claim was made in March 2025 under a policy that started in April 2022. ARAG declined the claim on the basis that the date of occurrence was December 2015 or November 2017 (when remedial work was undertaken), prior to the policy start date. Mr W argued that the latent damage discovered in 2024 constituted a separate event triggering the claim. The ombudsman found that legal expenses insurance covers uncertain risks, not pre-existing disputes, and that Mr W was aware of an unresolved dispute with the contractor before taking out the policy. Therefore, ARAG's decision to decline the claim was fair and reasonable, and the complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that legal expenses insurance is meant to cover uncertain risks, not inevitable or existing events. The policy terms require the date of occurrence to be during the period of insurance. Although Mr W argues the latent damage discovered in 2024 is a separate event, the ombudsman found unifying factors between the 2017 remedial work and 2024 damage, both stemming from the original poor workmanship. Critically, Mr W was aware of an unresolved dispute with K before taking out the policy in April 2022, having already complained about poor workmanship and lost confidence in K by 2018. Therefore, it was fair for ARAG to decline the claim based on the exclusion for events occurring prior to the policy start date.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website