Successfully negotiating claims since 1867
In general terms insurers will not pay our fees in acting for policyholders, hence the care we take in establishing the potential client’s demands and needs and discussing fee levels that best suit the business and the economics of the claim. Rarely, when the maladministration by the insurer is thought particularly egregious, the Financial Ombudsman Service will award a reimbursement of fees. One such case dealt with by our Contentious Claims Division has recently had that outcome.
Our client has a holiday home in an EU country, insured with a UK insurer whose managing agent advertised and marketed policies on the basis of its knowledge, skills and expertise in the insurance of foreign homes. The house was severely damaged by an insured event and the repair costs added up to a six-digit figure. In addition, different levels of local and national government required protective work to be done for modernisation and to avoid the possibility of major damage in the future. Those “betterments” raised the basic building costs by a further 80%. The policy covered all public authority requirements.
Despite that, insurers’ first reaction was to deny liability for the added works, and to put the policyholder to proof that the authorities were legally entitled to make such demands and that the level specified was in accordance with the law in the country concerned. We also had to demonstrate that our client was not entitled to the benefit of some funds available to nationals of the country where the house was, which insurers believed operated. In our discussions with the insurers’ adjuster it became clear that neither the adjuster nor the insurer had any knowledge of the relevant foreign law, of construction standards and practice in the country and – perhaps worst – any proficiency in the language of a country it professed to be an expert in.
To secure payment of those costs for our client we had to make all relevant enquiries ourselves. We do have relevant expertise in-house and we were able to demonstrate that insurers were indeed liable for all the obligatory costs. But our researches and interviews required travel and time abroad before the insurer finally agreed that it had to pay.
The case had to be referred to the ombudsman for a number of different elements of complaint. (Some of those are still outstanding and may well feature on this site in the future.) But one aspect that was settled was that insurers had to pay a significant proportion of our fees. The adjudication said that ultimately [the policyholder] will be billed for the work carried out by [Thompson and Bryan] including researching and obtaining the information it obtained about government procedures. I don’t think it’s fair or reasonable that [the policyholder] should pay for the work done for the benefit of [the insurer] as this should be part of its costs of dealing with the claim. Also, as previously mentioned, [Thompson and Bryan] had input on [the insurer’s] initial position that ‘improvements’ would be excluded when it seems these are likely covered by the policy as they’re deemed necessary by government.
The level of fees reimbursable is significant. An award of this nature by the FOS is a rare event and we are delighted to have got one for our client. Good for the client, good for us.