RegSol Blog

Insurance Company ordered to pay out claim on home insurance policy

May 2022

On 19th May 2022, Llyod’s Insurance Company SA (Llyod’s) was ordered by the High Court to honour a claim on an insurance policy for damage to the roof of a family home.

FSPO decision

Llyod’s had appealed to the High Court against a decision of the Financial Services Ombudsman (FSPO) to uphold a complaint against it over its refusal to pay out on a couple’s claim.

The FSPO had found it was “unreasonable, unjust and improper” for Lloyd’s not to remediate the damage complained of. It therefore ordered the insurer to pay €20,000 to the couple as compensation for the inconvenience caused.

Facts of case

The complainants’ insurance policy covered against structural defects in the property and when issues arose, including pyrite-related damage and damage to the structure of the roof, Lloyd’s paid out over the pyrite, but it did not accept the damage to the roof trusses was covered by the policy.

The refusal was based on the insurer’s assertion that the trusses, which it accepted were structural, had been deflected due to the positioning of a water tank in the attic area which put pressure on them and led to cracking on ceilings and walls. Lloyd’s maintained this constituted damage caused “to” the structure, rather than “in” the structure, which it said placed it beyond the policy remit.

High Court

The High Court noted the high threshold that must be met to set aside decisions of the FSPO in that the court must be satisfied the FSPO made a “serious and significant error” in reaching its conclusions.

Lloyd’s argued the FSPO was, in fact, guilty of serious and significant error in how it interpreted the word “structure” in the policy.

The FSPO however stood over its decision, saying the defect in the trusses, a load bearing part of the roof, comes within the policy definition of structure. The roofing structure, it said, is intended to hold water tanks and should be designed and constructed to carry out that purpose.

Ultimately, the High Court found there was “ample evidence” to conclude the identified defect came within the insurance policy terms. The court decided that a reasonable person interpreting the contract would expect the roof trusses to have been designed and constructed in a way that rendered them fit to bear a water tank load “or at least [...] the ombudsman was entitled to take this view”.

The court was also satisfied with the level of compensation of €20,000 granted by the FSPO to the couple was reasonable.

You can read the full details of the case here:

Llyod's Insurance Company v FSPO (