12th March 08

Complaints about buildings insurance to the independent Financial Ombudsman Service (FOS) rose by a third in 2007.

The torrential rain and flooding experienced in the summer of 2007 led to a flurry of home insurance claims, with 180,000 made to insurers in June and July alone and more than £3bn paid out as a result.

But the rise in claims has coincided with an increase in disputes. In 2007, complaints to the Ombudsman rose to 2,516 from 1,908 in the previous year. FOS spokeswoman Emma Parker says: 'The majority of claims are being handled well. The biggest

issue we are seeing in relation to storms are problems with repairs rather than the whole claim being refused.

'However, there is a steady stream of cases where firms have turned down claims on the basis that there was no storm at the time the damage occurred, or where it is agreed that there was a storm but the evidence indicates that it did not cause or contribute to the damage claimed for.

'The message to consumers is to be realistic. Just because your house was damaged in a storm does not mean that is an excuse to do the whole house up.'

Homeowners face three main problems when making a claim for weather-related damage. Insurers will first consider whether what you are claiming for is consistent with the storm damage.

They will also need to consider whether it has been proven, in the balance of probabilities, that storm conditions prevailed on or about the date of the damage.

Finally, insurers will consider whether the storm was the cause of the damage.

Insurers use local authorities and the Met Office to help ascertain what the local weather conditions were when damage allegedly occurred.

They will also review whether other houses in that area have suffered similar damage.

When reviewing a case, the FOS will expect insurers to present evidence that supports their assertions that there was no storm.

Trade body the Association of British Insurers says that the volume of complaints received last year made it inevitable that there would be an increase in customer disputes.

A spokesman said: 'Most of these disputes will be because customers have not fully understood what they are actually covered for. When a claim is rejected, insurers have a responsibility to explain why this has been the case.'


Some example complaints as published on the Financual Ombudsman Service website:

1. whether insurer responsible for cost of remedying faults in building work carried out as part of a claim for flood damage


Mrs C lived in an old mill house which was badly damaged by winter floods, following prolonged rain and storms. She was insured by the same firm for both buildings and contents and she submitted claims under both policies.

The insurer accepted liability and appointed contractors to carry out repairs to the property. After a few weeks, however, Mrs C concluded that the contractors were making unreasonably slow progress. She discussed the situation with the insurer and said she would like to appoint a local surveyor to represent her and supervise the work. The insurer agreed to her proposal and confirmed that it would pay the surveyor’s fee.

During the course of the subsequent works, Mrs C’s surveyor replaced the existing contractors with a new firm of builders. And Mrs C asked for some additional work to be carried out, at her own expense.

As time went on, Mrs C became increasingly dissatisfied – both with the surveyor and with the standard of the building work. When all the work was eventually completed, she hired a different surveyor to prepare a report on what had been done. He identified a number of faults in the building work and estimated that it would cost just under £50,000 to remedy matters.

Mrs C sent the report to the insurer, together with a claim for the cost of putting things right. However, the insurer refused to meet the claim. It said that as Mrs C had appointed a surveyor to oversee the work, responsibility for any faults lay with him. Mrs C then brought her complaint to us.

complaint upheld in part

The Ombudsman found the following: "It was clear that there were a number of problems with the building work. Some of the faults listed in the report related to the additional work that Mrs C had asked the builders to carry out. We agreed with the insurer that it was not responsible for putting right any defects in this additional work.

However, we said that the repair work relating to the flood damage was a different matter. The insurer had authorised and paid for the work. And it remained responsible for ensuring that the work was completed satisfactorily, regardless of the fact that – with its agreement – Mrs C had appointed a surveyor to oversee the builders.

We said the insurer should pay Mrs C £20,000 to cover the cost of remedying the defects in the work carried out to repair the flood damage."


2. claim for flooding and damp in basement after exceptional rainfall – whether policy also covered cost of repairing damaged damp-proofing in walls


After a period of exceptional rainfall, Mr and Mrs D discovered that the basement of their house had suffered flooding and damp. They put in a claim under their household insurance policy.

After sending an engineer to inspect the basement, the insurer agreed to pay the cost of repairing the flood damage. However, it said it would not meet the cost of making the walls of the basement watertight. The engineer had reported that the damp-proof membrane protecting the walls was in a poor condition and that this had contributed to the problems in the basement.

The couple thought it unreasonable of the insurer not to pay for all the repairs. However, the insurer insisted that it was not liable for the cost of repairing the damp-proof membrane or providing an alternative solution to keep the basement water-proof and damp-proof. It said the damage to the membrane must have been caused by defective design or poor workmanship or by very gradual movement in the surrounding earth.

The insurer pointed out that the policy did not cover such matters. Mr and Mrs D then brought their complaint to us.

complaint upheld in part

The Ombudsman found the following: "The evidence from the engineers suggested that the damage was likely to have been caused by ground movement rather than by any defect in workmanship or design. The insurer said that this type of ground movement constituted a ‘gradually-operating process’ – something that was not covered by the policy.

After reviewing the evidence, we concluded that the ground movement that had, in all likelihood, caused the damage was covered by the policy.

We therefore required the insurer to pay for the cost of installing a new system to replace the damaged membrane and protect the basement.

Mr and Mrs D had also asked to be compensated for the insurer’s ‘undue delay’ in dealing with the claim. We did not agree that it was appropriate in this case for the insurer to make such a payment. In view of the technically complex nature of the problem, the insurer had been entitled to appoint a firm of engineers to inspect and report on the damage. The insurer had acted promptly, both in appointing the engineers and then in completing its consideration of the claim, once the report was ready."