DRN-6286914

The complaint Mr D complains about the way AmTrust Specialty Limited handled a claim he made on his commercial property insurance, following an escape of water from a neighbouring property. What happened In Summer 2024 Mr D made a claim on his AmTrust commercial insurance policy. He’d been carrying out renovations to the property after a previous tenant departed, when he discovered damp on the wall of the kitchen. After some investigation, it transpired the adjoining neighbouring property had a leak. So a claim was made for the resultant damage. AmTrust reviewed the claim, in September 2024, it said it would only cover the cost of repairs needed, as a result of the leak, over and above what Mr D was already due to pay for his refurbishment. And since it considered Mr D had planned to refurbish the kitchen before finding the leak, it said it wouldn’t cover the cost of that. The claim then stalled, but in February 2025 Mr D provided AmTrust with costs for necessary damp proof works. AmTrust said it would agree to cover this cost. After some back and forth between the parties about the kitchen damage, and Mr D’s lost rental income, AmTrust made a settlement offer in April 2025. It reiterated it would cover the cost of the damp proofing in full and offered to pay 50% of the cost Mr D had been quoted for a new kitchen. It also said it would contribute to the lost rental income. Mr D complained about the settlement, and AmTrust issued a complaint final response letter (FRL) in June 2025. It agreed that it had caused delays in progressing the claim. It said as a result, it would reimburse Mr D seven months of lost rental income. It said whilst it accepted the property had been empty for 11 months, it felt there was a four-month period when Mr D didn’t provide it with information it needed to progress matters. As such it didn’t consider it was responsible for that delay, nor that it should compensate Mr D for that period. It did offer £300 compensation to reflect the unnecessary distress and inconvenience it had caused. Unsatisfied with AmTrust’s position, Mr D referred the complaint to the Financial Ombudsman Service. He said he’d received no payment from AmTrust, and its handling had been so poor that it had caused significant anguish. As well as settling the claim for the kitchen costs and loss of rent in full, he also wanted AmTrust to reimburse his council tax costs for the period the property was empty. And he wanted £5,000 to account for the upset AmTrust had caused. Our Investigator said she wouldn’t consider the request for council tax to be reimbursed because Mr D hadn’t raised that with AmTrust as part of his complaint. She thought AmTrust’s offer was a fair way to resolve matters and so, she didn’t recommend it increase the settlement. But for the upset caused to Mr D, she felt AmTrust should pay a total of £500 compensation. AmTrust accepted the outcome, Mr D didn’t. He said the report from his damp expert showed damp had affected all of the kitchen walls, which meant all of the kitchen was effectively destroyed by the leak. And he said he hadn’t delayed the claim, but there was a

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period of the claim when he was unwell. As the matter wasn’t resolved, it came to me to decide and in March 2026 I issued my provisional findings. I said whilst I agreed with the findings reached by that of our Investigator in relation to the settlement costs for the kitchen and loss of rent, I intended to award interest onto the amounts payable. I said I also intended to direct AmTrust to settle Mr D’s claim for council tax costs. Provisionally I said: “Damp proof works AmTrust agreed to pay these works in full, so I’m not going to issue any findings on the amount. However, I do intend to award interest on the sum to be paid, since Mr D has been unfairly without those funds AmTrust agreed to pay. AmTrust initially proposed to settle this amount in February 2025; there followed some discussion about other costs. But on 4 April 2025, when AmTrust set out its position in relation to all of the claim, I consider it should have, at that point paid the cost of the damp proof works to Mr D, since that amount wasn’t in dispute. As such, I intend to decide AmTrust should add 8% simple interest onto the amount payable (£7,148, minus any applicable excess) from 4 April 2025, until the date of settlement. Kitchen I’m satisfied AmTrust’s offer of 50% for the kitchen reinstatement is reasonable. Mr D accepts that the kitchen was removed as part of planned refurbishment of the property in order for it to be relet, with a deposit being paid for a new one before the leak was discovered. Whilst removing the kitchen then revealed a wet wall, which transpired was a leak, I’m not satisfied that it follows AmTrust should pay for all of the kitchen refurbishment. Mr D says his report from a damp specialist said all of the walls had been impacted by damp, and so it follows none of the kitchen was salvageable, and it was all damaged by the leak. But I’m not satisfied that is what the report says. Whilst the report recommended a new damp proof course for most of the kitchen walls, there is no evidence to suggest that the leak (which is the relevant insured event upon which Mr D’s policy has responded) was the cause of the existing damp proof membrane no longer functioning. Mr D’s report suggests some of the issue had been through rising damp, and the age of the property meaning the damp proof course was no longer functioning. And the report makes no mention of any damage to kitchen units. So whilst AmTrust did agree to reimburse Mr D for the damp proof works in full, I’m not satisfied that it follows it should also reimburse Mr D’s costs for the full kitchen reinstatement. There are simply too many unknowns for me to find AmTrust’s offer for the kitchen was unfair. Mr D had disposed of much of the kitchen before making his claim, with no photographs to support that there was any water damage to the disposed units. In some of the photographs provided to AmTrust, part of the kitchen (on the opposite wall to the leak) was still in situ, but there was no evidence provided of any damage caused by the leak to any of that, or the flooring which I also understand was replaced. It’s also not possible to determine if the new kitchen installed was a like for like replacement of the old one. As such, having considered all of the points set out above, I intend to decide AmTrust made a reasonable offer to settle the kitchen at 50%. I realise this means Mr D is partly ‘out of pocket’, but as a landlord, carrying out any updates to the property will always leave one in this situation. Mr D’s policy only covers him for insured damage; not all works which may need to be done to relet a property.

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However, at the point at which AmTrust issued its complaint response to Mr D on 23 June 2025, I intend to decide it should have told Mr D it could accept payment of the settlement for the kitchen, whilst still disputing the amount, and referring the matter to this Service. After all, it had offered to pay this amount, and so I intend to find Mr D has been unfairly without those funds since 23 June 2025. As such, to the settlement AmTrust pays (£7,414), I intend to decide it will need to add 8% simple interest from 23 June 2025 until the date of settlement. Loss of rent and council tax I intend to decide AmTrust’s offer to reimburse seven months of lost rent to be reasonable. On 20 September 2024, AmTrust set out that Mr D’s policy would only pay for additional repair costs as a result of the water leak, which I consider was a reasonable starting position since the policy only covers insured damage. Mr D was invited to provide quotes for any works needed as a result of the leak. However, despite some chasers from AmTrust, Mr D’s next contact was on 10 February 2025, nearly four months later. I accept that Mr D had been unwell during that time, but that doesn’t mean its reasonable for AmTrust to bear the lost rental income during that period. AmTrust couldn’t reasonably settle the claim without obtaining further information from Mr D, so him not responding did contribute to around a four-month delay in the claim. Had he responded earlier, I’m satisfied AmTrust would have made a settlement offer earlier. However, given what I’ve set out above about AmTrust not allowing Mr D to accept its offer and still make a complaint to this Service. I intend to require it to add 8% simple interest onto the seven months’ loss of rent to be paid (£12,075) from 23 June 2025 (the date of the FRL) until the date of settlement. I also consider that, whilst Mr D might not have specifically raised the issue of council tax with AmTrust as part of the complaint, that loss flows from the same delay which caused AmTrust to agree to pay seven months loss of rent. As such, I intend to decide AmTrust should reimburse Mr D’s council tax costs for seven months, so long as he can provide a copy of a tenancy agreement showing that council tax is paid by his tenant. But because Mr D hadn’t specifically raised this point with AmTrust before, I don’t intend to direct AmTrust to add compensatory interest at 8% onto this amount. Compensation AmTrust accepts it could have handled matters better, and it has had a part to play in the delayed settlement of this claim. Having regard to our compensation awards, I’m satisfied £500 is a reasonable sum to be paid to recognise the impact of any poor handling from AmTrust. An award of £500 recognises where the impact of a business’ mistakes have caused considerable upset lasting over a number of months. I understand this has been a challenging time for Mr D, but our compensation awards are to reflect unnecessary distress and inconvenience caused by a business’ mistakes, rather than the inevitable stress and worry that comes with having damage to a rental property and the challenges that presents.” Responses to my provisional findings AmTrust didn’t provide a response. Mr D did. He said whilst he welcomed the direction on council tax and the award of interest, he didn’t accept that the claim settlement was reasonable. He maintained that the damp report supported that the whole kitchen needed to

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be replaced as a result of the escape of water. He said no damp had been experienced previously and the need for the damp proof works only came about as a result of the escape of water which the neighbour had accepted liability for. He also said I hadn’t accounted for the fact that whilst he hadn’t contacted the insurer for four months, that was because both he and his wife were seriously ill. He said AmTrust had a poor reputation for paying claims and he wasn’t even aware AmTrust was his insurer. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. As AmTrust hasn’t responded I see no reason to depart from my findings set out in relation to the application of interest onto amounts payable, and council tax. As such, my provisional findings on those matters are now those of this, my final decision. I’ve reviewed Mr D’s comments about the kitchen/damp proofing, but I’m still persuaded it was fair and reasonable for AmTrust to settle the kitchen costs at 50%. By disposing of the kitchen and providing no photographs of any damage to the units, Mr D has prejudiced AmTrust’s position in relation to it assessing the damage under the policy. And for the reasons set out in my provisional findings, I’m not persuaded that the damp survey supports that all of the kitchen had to be replaced as a result of the escape of water. As such, my final decision is that AmTrust’s offer of 50% towards the kitchen is fair and reasonable. I do understand Mr D and his wife were seriously unwell during the four months where they didn’t go back to AmTrust to progress the claim. I don’t doubt it would have been difficult for them to focus on getting their rental property sorted whilst recovering. However, it wouldn’t be fair and reasonable for AmTrust to compensate Mr and Mrs D for lost rental income during a period where it wasn’t in a position to settle the claim because it was awaiting input from them. Had Mr D told AmTrust he was unable to progress matters due to illness, it might have been able to assist, but I can’t see that he did. So it follows that I can’t reasonably find AmTrust responsible for that delay. Mr D says AmTrust has a reputation online for not paying claims. I don’t know whether that is the case, but this Service looks at individual complaints to decide if an insurer has acted fairly and reasonably. And for the reasons set out in my provisional decision, and those set out above, I’ve found that AmTrust did get some things wrong. It should have paid settlement amounts earlier and progressed matters better. But I’ve also found that its overall settlement offer was reasonable, given the particular circumstances of this complaint. My final decision My final decision is that I uphold this complaint and I direct AmTrust Specialty Limited to: • Pay £6,898 for damp proof works (£7,148 net the £250 excess). To that sum, it will need to add interest* from 4 April 2025, until the date of settlement. • Pay £7,414 for kitchen repairs, with interest* added from 23 June 2025 until the date of settlement. • Pay £12,075 for lost rental income, with interest* added from 23 June 2025 until the date of settlement. • Pay Mr D’s council tax costs for seven months, if Mr D can provide it with a tenancy agreement to show his tenant would bear the cost of council tax payments.

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• Pay £500 compensation, including £300 already offered but not paid by AmTrust. *Interest is at a rate of 8% simple per year and paid on the amounts specified and from/to the dates stated. HM Revenue & Customs may require AmTrust to take off tax from this interest. If asked, it must give Mr D a certificate showing how much tax it’s taken off. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr D to accept or reject my decision before 11 May 2026. Michelle Henderson Ombudsman

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