AmTrust Specialty Limited · DRN-6179639

The complaint Mrs N complains that AmTrust Specialty Limited (AmTrust) unfairly declined a claim she made on a legal expenses insurance policy. What happened Mrs N has a legal expenses insurance policy provided by AmTrust. She had building work carried out at her property but the work carried out was of a poor quality and so needed rectification. Mrs N sought to claim with AmTrust for her costs in taking action against the contractor who’d carried out the original works. After reviewing the information available, AmTrust declined cover, citing an exclusion in the policy for construction related claims where the value was more than £5,000. Mrs N complained to AmTrust and then our service. She said a quote for rectification work she’d obtained was less than £5,000, and that further assessments had indicated the scope of required works was less than previously indicated. On that basis she didn’t think it was fair for the exclusion to apply. Our investigator thought AmTrust’s decision to decline cover was reasonable, as the information available suggested that it was likely additional work would be required beyond what had been included in the quote obtained by Mrs N and the additional information didn’t persuade him that the value of the claim was less than £5,000. Mrs N didn’t accept this and asked for an ombudsman’s 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. AmTrust has a duty to handle claims fairly and efficiently, and not decline claims on unreasonable grounds. When it declined cover for the claim, it point to an exclusion of the policy which says that for contractual disputes there’s no cover for any claim “Directly or indirectly arising from constructing buildings or altering their structure, except in relation to disputes where the amount in dispute is less than £5,000 inc. VAT.” As it seeks to rely on this exclusion, the onus is on AmTrust to show that it reasonably applies to the circumstances of Mrs N’s claim. The point in dispute here is whether the value of Mrs N’s claim is more than £5,000. If it is, then I’m satisfied the claim can be declined fairly. There’s no dispute that Mrs N’s claim relates to a contractual dispute about construction work, and the exclusion clearly says there’s no cover for such a dispute if the value exceeds £5,000. There’s no suggestion that any other section of cover could apply to Mrs N’s claim. When she submitted the claim, Mrs N said the value of it was £10,000, which would plainly

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be more than the limit outlined in the policy exclusion. However, that seems to be an amount she’s sought to have refunded by the original contractor prior to making the claim, when it became apparent the work was of poor quality. I think it was right that AmTrust undertook further enquiries and assessments to establish the value of the claim in order to assess cover. AmTrust has relied on solicitors it appointed to review this matter, and their opinion that the value was more than £5,000. While it’s entitled to ask for and consider advice, as the decision to decline cover relates to the policy terms and conditions, it still has a responsibility to properly consider the evidence available and how it applies to the policy. Ultimately here, AmTrust takes the same position as its solicitors in saying that the claim value exceeds the £5,000 limit. I’ll refer to AmTrust within this decision but where relevant this also refers to the legal representative’s advice. During the course of Mrs N’s dispute with the contractor who carried out the original works, a report was prepared which stated “The overall works are very shoddy and do not comply with the current building regulations. It is likely the build will need to be demolished and rebuilt from new, adding a pad and beam foundation to support the outer walls.” The report went on to say “If proper foundations under the walls can be proven then the structure may not need to be fully demolished.” It was on the basis of this report, suggesting it was likely the entire structure would need to be demolished and rebuilt that the solicitors and AmTrust concluded the value of Mrs N’s claim was more than £5,000 and so the policy didn’t provide cover. I’m satisfied that based on the initial report, it was reasonable for AmTrust to conclude the value of Mrs N’s claim was more than £5,000, with the knock on effect that the claim wouldn’t be covered. The report set out the deficiencies in the works carried out but also made it clear the extent of the works that would be required in order to bring them up to standard, and that this was likely to require the demolition and rebuilding. The onus therefore shifts, I’m satisfied, to Mrs N to show that the value of the claim is less than £5,000. Unfortunately, I don’t think that’s the case. Mrs N has provided a quote for works from a contractor for £3,250. The nature of the works proposed, however, doesn’t include the demolition and rebuilding which has been indicated as “likely” to be required, or any inspection or works to the foundations. Nothing I’ve seen changes the earlier conclusion around the likelihood of demolition on the basis of substandard foundations– and so I have to take that as the position regarding the required works. There are text messages suggesting the cost of works and that an inspection has been done of the foundations, but unlike the earlier report, there’s no detail or reasons given for the conclusions reached, and no formal written report confirming the findings. On balance, I think AmTrust could reasonably say the report was more persuasive. I think that in order to refute AmTrust’s position, Mrs N would need to show that either the work including demolition and rebuilding could be carried out for less than £5,000; or alternatively that demolition and rebuilding isn’t required in order to bring up the works to the required standard. The most obvious way to show that would be a report detailing further investigation into the foundations and whether these need replacing. I acknowledge the report suggests further assessments be carried out, but I don’t think it’s reasonable, based on the content of the report, to expect AmTrust to fund a report into the foundations and cost of all the works required. If Mrs N seeks to refute the position taken by AmTrust, she’d be open to obtain such a report and provide it to AmTrust to consider further. I don’t think that text messages meet the standard expected as evidence to refute the report. They have no details of the qualifications or expertise of the person sending the message,

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and don’t outline the investigations carried out, the conclusions reached or an explanation of the reasons. I’m also mindful that the report contains a disclaimer about its use. However, it was provided to AmTrust and as such it was fair for it to refer to the contents and conclusions of the report. While I similarly note Mrs N’s comments around the potential to reuse materials, and the quote she’s obtained, I don’t think she’s been able to demonstrate the value of her claim (which would essentially be the cost of turning the works into a suitable condition) is less than £5,000. None of the evidence she’s provided is from a surveyor or other properly qualified person, and nothing suggests that demolition and reinstatement isn’t considered “likely” to be required. I think it was fair for AmTrust to rely on the report and conclude from this that the value of the claim exceeded the £5,000 set out in the policy exclusion. Mrs N has been unable to reasonably demonstrate that the value of the claim is less than £5,000, or that the conclusions relied on by AmTrust were incorrect. I agree that the exclusion applies to Mrs N’s claim and so AmTrust acted reasonably when it declined cover. I’m also aware that Mrs N was unhappy that the solicitors appointed by AmTrust referred to making a claim under Section 75 of the Consumer Credit Act 1974, for breach of contract by a supplier, against a credit card provider. Mrs N confirmed she hadn’t paid for the work by credit card, or using any credit facility. This confusion appears to have arisen as the claim form completed by Mrs N included a section relating to payment by credit. Mrs N completed this section of the claim form, so it seems AmTrust assumed from this that she’d made the payment by credit. It’s accepted that the circumstances of here mean that no Section 75 claim could be made (as the payments to the original contractor were made by bank transfer), but I can’t say that AmTrust did anything wrong here. It passed the matter for the solicitor to make further enquiries, and reference had been made to a payment on credit. As that was the case, I think it’s reasonable that AmTrust and its agents would have looked at all possible options for a claim, which is what happened. My final decision I don’t uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mrs N to accept or reject my decision before 20 May 2026. Ben Williams Ombudsman

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