Red Sands Insurance Company (Europe) Limited · DRN-6245108

The complaint Ms S is complaining about the way Red Sands Insurance Company (Europe) Limited (‘Red Sands’) has handled a claim she made on her buildings insurance policy. In particular she’s unhappy with the amount it’s paid to settle the claim. Red Sands has used a number of agents to handle the claim on its behalf. But, for ease of reference, I shall refer to any of the agents’ actions as being done by Red Sands. What happened The facts of the complaint are well known to all parties so I won’t set them out in detail. But, in summary, Ms S contacted Red Sands in December 2024 to report damage and to claim for the damage against her buildings insurance policy. Initially Red Sands had some concerns relating to the condition of the property and whether Ms S had misrepresented it when she took out the policy and it said this could potentially impact the claim settlement. But it later said it wouldn’t impact the settlement. Red Sands then offered a cash settlement of around £3,600 based on its surveyor’s inspection. Ms S didn’t think this was fair as she thought the surveyor hadn’t taken a lot of the damage into consideration. So she arranged for her own contractors to scope and quote for the damage. Following this, Red Sands agreed to pay a cash settlement of around £40,000. It also said it would pay a further £10,000 for alternative accommodation (‘AA’). Ms S disputed the amount Red Sands said it would pay for AA. She said it had based this on one-bedroom properties. But she said her property had two bedrooms and she was entitled to a like-for-like property. And she provided a suitable property which she suggested would cost £15,000 for the requisite time. Red Sands didn’t agree to pay more for the AA and said as an alternative Ms S could arrange and pay for the AA herself. She could then claim it back. Ms S complained to Red Sands about the way it had handled the claim and said the following: ● She set out at the very start of the claim that she was neurodivergent and explained what she needed – to receive regular updates (even if it was to simply say there aren’t any updates) and to be clear in communication what’s being asked of her. She said the first claim handler – who I shall refer to as ‘K’ – was really good and supportive of her. But she said a senior handler – who I shall refer to as ‘J’ – later took over the claim, but she didn’t think he treated her fairly. She said she rarely heard from him and there were long delays in the handling of the claim once he took over. ● She thought Red Sands’ initial concerns raised about the level of cover were unfair. She said this caused her a lot of anxiety and sleepless nights. ● She thought the way it initially looked to settle the claim was unreasonable. And she said this caused a long delay in the progression of the claim. ● She thought the way Red Sands was looking to settle the AA was unfair. She said it never commented on her query that she was entitled to a two-bedroom property. She didn’t think it was fair for Red Sands to impose a condition on receiving the cash

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settlement. She said she just wanted to be able to make a fair and informed decision. Instead she said she was forced into accepting a settlement under duress. Red Sands acknowledged it had incorrectly assessed the value of the claim at the start and said it would pay Ms S £100 in compensation. Ms S referred her complaint to this Service. I issued a provisional decision upholding this complaint and I said the following: “Ms S has raised several concerns about the way Red Sands has handled her complaint. My decision focusses on what I consider to be the core issues for me to address. However, I assure all parties I have read and considered everything all parties have raised. I shall address the issues I consider to be core to this complaint under separate headings. Initial validation checks Ms S has said she found Red Sands initial enquiries around the policy and comments that the settlement could be reduced upsetting. And I don’t doubt that was the case. But it’s not unusual for insurers to carry out validation checks at the start of a claim. In this case, it had concerns about the condition of the property. The statement of fact sets out the information it was provided when the policy was first taken out by Ms S. And this said: “The property has never had any cracks wider than 1mm on internal or external walls i.e. damage caused by subsidence.” However, it became apparent that there may have been some cracks in the walls. So potentially the information it had been given at the start of the policy may have been incorrect. Given this, it was reasonable that Red Sands carried out some queries. Ultimately, Red Sands said there wasn’t any impact on the premium. And I haven’t seen anything to show Red Sands acted unfairly in this regard. Red Sands general handling of the claim. When Ms S first reported the claim to Red Sands, she advised it that she was neurodiverse. And she explained that she needs communication sent to her in a clear manner, needs time to digest what’s asked of her and she asked Red Sands to send her regular updates. It was for Red Sands to ensure it accommodates any reasonable adjustment requests Ms S made. And I consider the requests Ms S made were reasonable. I think K did actively look to support Ms S throughout. She continually kept Ms S updated and responded to any queries Ms S raised swiftly. And Ms S has commented she was happy with the way K handled the claim. However, I don’t think the claim was handled fairly by J. I can see that there were several instances where Ms S would go weeks without hearing from him. She’d call regularly seeking updates, but they weren’t provided. On one occasion I note J said he’d phone her on a specific day, but he didn’t do so. And he didn’t contact her again for another week. I also found his communication – especially when discussing AA – to be somewhat blunt and would have added to Ms S’s anxiety. I do think a lot more could have been done in this time to aid and support Ms S to minimise the anxiety she suffered. Claim settlement There’s no dispute Red Sands’ surveyor didn’t assess the extent of the damage to the property fairly at the start of the claim. As a result of this Ms S felt she had to appoint her

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own contractors to appraise the costs. I think it’s understandable she did so. This ultimately showed that the initial cash settlement put forward was around £37,000 short of what was needed to carry out the work. It seems this error delayed the claim by around three months. And it’s inevitably significantly increased Ms S’s anxiety. I’m satisfied it has now paid a fair settlement to rectify the damage to the house. But I think this should have been settled a number of months sooner. I think Ms S has also raised a fair concern relating to the AA settlement. At first, Red Sands appointed a contractor to look for suitable properties in the surrounding area to Ms S’s property. And it was fair for Red Sands to do so. However, Ms S responded to Red Sands several times setting out that the proposed AA settlement was based upon one-bedroom properties. But she said her property was a two-bedroom property. And she said the terms of the policy entitled her to a like-for-like property. I can’t see that Red Sands has ever engaged with this point. The terms of the policy say that Red Sands will “pay for the cost of renting a similar property”. So it was fair for Ms S to query why the AA settlement was based upon one- bedroom properties when a “similar property” would be a two-bedroom property in the surrounding area. But, even if that’s not the case, I would have expected Red Sands to have responded to Ms S’s query and explained why the properties it had sourced were suitable. And I don’t think it was fair for it to simply reply and say, if she didn’t agree with the settlement, she could pay for the AA herself and claim it back. I recognise Red Sands says it shouldn’t have to pay for more than what Ms S pays for AA. But a cash settlement should mirror its liability under the terms of the policy. And I think the policy covered Ms S to stay in a property similar to her own for the duration of the repairs whilst hers was uninhabitable. And, based on the information I’ve seen, I’m not persuaded the proposed cash settlement allowed for that. So, I think Red Sands should update the cash settlement for AA to reflect the amount it would have to pay to place Ms S in a two-bedroom property for the duration of the time the property would be uninhabitable. Distress and inconvenience Ms S has provided detailed submissions setting out the impact this has had on her – including a statement from her clinical psychologist. And it’s clear that the whole claim process itself has had a profound physical, mental and financial impact upon her. I’m persuaded that she did have to increase the number of therapy sessions she would usually attend and all this has heightened her anxiety. That said, it has to be noted that dealing with a claim such as this would always be stressful. So Ms S would always have experienced a degree of distress and inconvenience. But, for all the reasons I set out above, I do think the way Red Sands has handled the claim has significantly increased the level of distress and inconvenience Ms S has suffered. The Investigator thought Red Sands should increase the compensation to £1,500 and I agree. I also think Red Sands should refund any additional therapy sessions Ms S can show she incurred in addition to what she would usually have attended.” Ms S responded to accept my provisional decision, but raised a number of queries: • Is the outcome that she’d receive a further £1,400 in compensation? • When is simple interest payable? • Is Red Sands required to base AA settlement on current rental costs or costs 10 months ago?

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• Does Red Sands’ reserve figure of £25,000 have any bearing to the AA settlement? • How should the surrounding area be interpreted in this claim given where she lives. She said she was concerned that properties Red Sands suggest would be significantly outside of her community area. Red Sands didn’t respond to my provisional decision. 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 neither party has given me anything else to think about I see no reason to reach a different conclusion the one I reached in my provisional decision. So I uphold this complaint for the reasons I set out previously. However, given Ms S’s comments, I shall provide further clarification surrounding the AA settlement. Firstly, while I note what Ms S has said about Red Sands’ reserve figure, this isn’t the amount it has to pay – it’s simply the amount Red Sands needed to set aside to cover its potential liabilities. It isn’t an exact an amount of what it’s liable for. So it doesn’t have a bearing on what it’s liable for under the terms of the policy. As I set out in my provisional decision I think Red Sands should update the cash settlement for AA to reflect the amount it would have to pay to place Ms S in a two-bedroom property for the duration of the time the property would be uninhabitable. And it should base the cash settlement based on the rental cost when it updates this cash settlement. However, while I note Ms S’s query, I haven’t considered what is considered the “surrounding area” as this wasn’t the subject matter of this complaint. My final decision For the reasons I’ve set out above, it’s my final decision that I uphold this complaint and I require Red Sands Insurance Company (Europe) Limited to do the following to put things right: 1. Increase the AA settlement to reflect what Red Sands would pay for a two-bedroom property based on the rental cost at the time it updates this cash settlement; 2. Pay Ms S £1,500 in compensation if it hasn’t already done so. I understand it has already paid her £100. If so, it will need to pay her a further £1,400; 3. Refund any additional therapy sessions Ms S can show she incurred in addition to what she would usually have attended; 4. Pay 8% simple interest on (3) from the date Ms S paid for each additional session until Red Sands pays it*. * If Red Sands thinks that it’s required by HM Revenue & Customs to deduct income tax from that interest, it should tell Ms S how much it’s taken off. It should also give her a tax deduction certificate if she asks for one, so she can reclaim the tax if appropriate. Under the rules of the Financial Ombudsman Service, I’m required to ask Ms S to accept or reject my decision before 22 April 2026. Guy Mitchell Ombudsman

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