Partially upheld: Motor insurance, claim handling complaint against Calpe Insurance Company Limited

Decision detail

Summary

Mr T complained about being required to pay a £3,000 excess on his motor insurance policy following a collision with a pedestrian in September 2020. After reporting the collision to broker X, Mr T was informed in July 2022 of investigation costs of approximately £540. However, X went out of business and Mr T received no further communication until November 2024, when Calpe's legal representatives demanded the full £3,000 excess following settlement of the pedestrian's claim. The ombudsman found that while the excess was clearly stated in the policy and properly applied, Calpe's failure to communicate with Mr T for two years regarding claim progress and settlement caused unjustified distress. The complaint was upheld in part, with Calpe ordered to pay £150 compensation for the distress and inconvenience caused by poor communication.

The Ombudsman's reasoning

The ombudsman found that while the £3,000 excess was clearly stated in the policy wording and properly applied to third-party claims, Calpe's handling of the claim was unfair due to lack of communication. The policy terms permitted Calpe to settle claims without Mr T's agreement, but this power must be exercised fairly and reasonably. Although Mr T was aware of the collision and informed in 2022 of potential costs, the complete absence of contact for two years regarding claim progress, settlement, or the final excess demand caused unjustified distress. The ombudsman considered that Mr T could have reasonably expected to pay something towards claim costs, but Calpe's failure to keep him informed was poor practice that warranted compensation.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website