UK Insurance Limited · DRN-6242953

The complaint A company, which I will refer to as “B”, complains about U K Insurance Limited (“UKI”)’s handling of their buildings insurance claim. Mr C has brought the complaint on behalf of B, so I may refer to him below. All references to UKI also include its appointed agents. What happened Below is intended to be a summary of what happened and does not therefore include a full timeline or list every point that has been made. • Mr C is the owner of three flats in a single building. • In March 2025 Mr C’s managing agent said the tenant on the middle floor of the building had reported a leak in their property, and in the communal areas. • An emergency plumber was contacted to deal with the leak, but it was discovered the ground floor flat had also sustained damage. • The ground floor flat was untenanted at the time due to renovation work (which Mr C had previously made UKI aware of). The renovation work was concluded a few weeks before the escape of water. • Mr C made a claim to UKI, who in its initial call informed him he had cover for the damage. However, it later declined the claim for damage in the ground floor flat as it was unoccupied, which it says is excluded from cover. • Mr C was unhappy with UKI’s decision and raised a complaint. He said UKI had taken several months to communicate its decision, in which the condition of the property had deteriorated. He said he subsequently lost a tenant that agreed to move into the property and was unhappy with the handling of UKI’s loss adjuster in arranging a settlement for the aspects of the claim it agreed to cover elsewhere in the building. • In its final response letter, UKI maintained its decision to decline the claim for damage to the ground floor flat. It said damage caused by an escape of water if the property is vacant or disused was excluded from cover. It also pointed to the definition of ‘vacant or disused’ in the policy: “Bulldings or any part thereof that have become unoccupied, untenanted or which have not been actively used as a tenanted property under agreement for a period of more than 30 consecutive days.” • However, it acknowledged issues with its communication and the initial settlement offered by its adjuster. It offered Mr C £800 compensation for the inconvenience this caused. • As it wasn’t covering the damage to the ground floor flat, UKI said Mr C didn’t have a valid loss of rent claim. It also highlighted Mr C didn’t have tenants in the property or a secured agreement.

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• Mr C disagreed with UKI’s final response and brought the complaint to our service. Our investigator’s view Our investigator recommended the complaint be upheld. He said it wasn’t in dispute the property was untenanted, but he wasn’t satisfied the property was unoccupied. He said there was no definition of ‘unoccupied’ in the policy. But he considered the purpose of the vacancy term was intended to prevent damage going unnoticed and getting progressively worse. He said Mr C confirmed renovation work was being carried out in the ground floor flat within 30 days of the incident happening, with contractors regularly at the property during this time. So, he didn’t think UKI had acted fairly and recommended it settle this part of the claim against the remaining terms of the policy Our investigator felt Mr C had a valid claim for loss of rent under the policy. Mr C had provided detail from his managing agent confirming an offer had been made to rent the property. Our investigator was satisfied he was unable to move forward with this as the property wasn’t habitable. He said UKI should consider this claim subject to the remaining terms of the policy. Our investigator considered the compensation offer made by UKI was fair and reasonable in the circumstances. UKI disagreed with our investigator’s view of the complaint and asked for it to be passed to an ombudsman to decide. It didn’t agree contractors being in the property within 30 days of the incident meant it was occupied. It said it wasn’t covering the damage, so was unable to consider loss of rent. It said there was no evidence to support Mr C secured tenants, other than an email from his managing agent which communicated a verbal offer. My provisional decision I issued a provisional decision on 9 March 2026. In my provisional findings I said: “I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. I’m intending to uphold the complaint for these reasons: • Mr C confirmed to UKI in May 2025 the leak had originated from the middle floor flat. I’ve not seen anything that persuades me this was incorrect, or this is in dispute. So, I don’t consider the term UKI is referencing here relevant as I consider the damage to the ground floor flat was consequential and unavoidable. • While there wasn’t a tenant in the property, someone had been present on the ground floor flat regularly within 30 days of the incident. There’s no evidence the damage came from the ground floor flat, and as the damage was external to the ground floor flat, I don’t consider Mr C would have been able to mitigate damage if a tenant had been in the property at the time of loss.

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• I don’t think UKI have acted fairly in declining the claim for the ground floor flat for the reasons it has. It should now proceed to deal with the claim under the remaining terms of the policy. • The policy offers cover for loss of rent and as I think UKI should reconsider the claim for the damage to the ground floor flat, it should also do so regarding loss of rent. Mr C has provided an email from his managing agent which confirmed he had accepted an offer from a tenant to take the property. Considering the damage and the deteriorated condition of the property, I’m satisfied the property wouldn’t have been habitable. • Following repairs, Mr C secured tenants in around August 2025. As I’ve set out above, I’m not persuaded the damage to the ground floor was avoidable and I think the property would have been tenanted had it not been for this. So, I think UKI now needs to reconsider this under the remaining terms of the policy. • I’ve considered the compensation offered to B by UKI. I accept this would have impacted Mr C personally both in terms of time and frustration, but I can’t compensate him in his own right as this complaint is made on behalf of a legal entity – B. • B is not a natural personal and therefore cannot suffer injury to feelings. I accept there would have been inconvenience in sorting that matter out, that is only natural. UKI has provided compensation for the inconvenience of its actions, and for the aspects I can consider, I feel this fairly recognises their impact. And I’m mindful that the financial loss to B is covered in my intended direction below. So, for these reasons, I intend to uphold this complaint. Putting things right UKI should settle the claim for the escape of water and loss of rent, subject to the remaining terms of the policy. B had repairs carried out to mitigate further losses, so UKI will need to meet any eligible costs under the terms of the policy here. UKI can request evidence such as invoices should it require it. UKI will also be required to pay 8% simple interest on this amount from the date of the invoice up until the date it makes payment to B. The loss of rent aspect should also include consideration of any other associated financial losses that may have occurred, and would’ve ordinarily been paid by the tenant, such as council tax. UKI can ask for proof of these costs if required. UKI will also be required to pay 8% simple interest on any payments it makes in this regard. This should be from the date of the invoice, or when the payment was made, up to the date it provides reimbursement to Mr C.” Responses to my provisional decision Mr C agreed with my provisional findings. UKI didn’t agree with my provisional findings. In summary it said the intention behind the wording of the ‘Vacant and Disused’ exclusion was to account for situations where a tenanted property may not have an occupant.

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It said as an exclusion applied, there was no cover, regardless of whether the event causing damage could be mitigated or not. It reiterated that as it didn’t agree there was a valid claim, loss of rent did not apply. 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. I’ve reconsidered all the available information along with UKI’s additional comments, but it doesn’t change my decision – or my reasoning. I don’t think UKI have acted fairly in declining the claim for the ground floor flat for the reasons it has. To be clear, I don’t think it’s reasonable it applies the exclusion for the reasons I’ve already set out in my provisional findings. I note the comments from UKI about the intention behind wording in its policy, but I don’t agree this is a reasonable exclusion to apply here. It should now proceed to deal with the claim under the remaining terms of the policy. So, for these reasons, I uphold this complaint. Putting things right To put things right UKI should: UKI should settle the claim for the escape of water and loss of rent, subject to the remaining terms of the policy. B had repairs carried out to mitigate further losses, so UKI will need to meet any eligible costs under the terms of the policy here. UKI can request evidence such as invoices should it require it. UKI will also be required to pay 8% simple interest on this amount from the date of the invoice up until the date it makes payment to B. The loss of rent aspect should also include consideration of any other associated financial losses that may have occurred, and would’ve ordinarily been paid by the tenant, such as council tax. UKI can ask for proof of these costs if required. UKI will also be required to pay 8% simple interest on any payments it makes in this regard. This should be from the date of the invoice, or when the payment was made, up to the date it provides reimbursement to Mr C. My final decision My final decision is that I uphold B’s complaint. To put things right I direct U K Insurance Limited to do as I’ve set out above. Under the rules of the Financial Ombudsman Service, I’m required to ask B to accept or reject my decision before 20 April 2026. Michael Baronti Ombudsman

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