DRN-6024718

The complaint Miss B complains about the way Admiral Insurance (Gibraltar) Limited (‘Admiral’) handled and settled a claim she made on her landlord insurance policy. What happened Miss B held a landlord insurance policy underwritten by Admiral for her property she rented out while she was working abroad. Following a property inspection in January 2025, it was identified that the tenants had caused extensive damage. Miss B took steps to remove the tenants from the property and she began reinstatement works. Miss B went on to raise a claim with Admiral and said the policy provided cover for vandalism or malicious damage caused by tenants. Admiral considered the claim and instructed a property inspection which identified damage to carpets and the flooring underneath it as well as damage to internal plastered walls. Admiral went on to make a partial settlement of the claim but said the majority of the damage claimed for was excluded due to being gradually occurring. Miss B was dissatisfied with Admiral’s response and raised a complaint. She said Admiral had unfairly narrowed the scope of the claim to what the assessor could see at the time of the inspection and had failed to reassess the claim when she notified them of further damage once carpets and floors were lifted. She said they had wrongly applied the gradual damage exclusion to the claim and ignored evidence she provided about the full extent of the damage. She also said Admiral had communicated poorly with her and pushed her into a complaint process rather than properly reviewing the claim. Admiral considered the complaint but concluded they had dealt with the claim fairly. They said the damage to the walls and structural elements resulted from sustained saturation and developed over a period of time and therefore fell within the gradual damage exclusion under the policy. Miss B remained unhappy with Admiral’s response to the complaint – so, she brought it to this Service. She said the damage was caused by the direct and malicious actions of the tenants and should be covered in full under the “tenant’s damage to buildings” wording in the policy. An Investigator looked at what had happened and ultimately recommended the complaint should be upheld in part. She said she was satisfied the policy's general exclusion applied in the circumstances because the evidence suggested that damage had resulted from repeated exposure over time rather than a single identifiable event. The Investigator also felt Admiral had handled the claim fairly quickly and did so did not make an award of compensation for service failings. But the investigator did conclude that Admiral should settle any elements of the claim they had accepted under accidental damage based on the actual costs Miss B would incur rather than Admiral's own network contractor rates. Finally, the Investigator outlined that it appeared Miss B had raised that there was damage to the ceilings of the property, but Admiral hadn’t addressed this in the claim.

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Admiral responded to the Investigator’s outcome and said the amounts they had offered in settlement were based on Miss B’s contractor rates, and they maintained they hadn’t been notified of damage to the ceilings as part of the claim. Miss B also responded to the Investigator’s view but did not agree with the conclusions. She provided several detailed responses, the main points of which were: • The general exclusion did not exclude accidental or malicious tenant damage. • Accidental or malicious damage was not progressive or time related. • The saturation caused instant and irreversible damage and was not gradual and there was no proof the damage occurred over a prolonged period. • There was no damp or damage noted at a late 2024 property inspection. • Admiral’s assessor had refused to lift carpets and therefore failed to identify the full extent of the loss. • Admiral had been informed by phone and e-mail of the ceiling and wider damage before settlement but failed to reassess the damage. • The damage to the plastered walls was by the same acts as the flooring damage which Admiral had accepted so should be treated consistently. • She had suffered distress and inconvenience as well as financial disadvantage and a loss of rent as a result of how the claim had been handled. I then issued a provisional decision on the complaint, and I said the following: “I should explain from the start that I won’t be repeating the entirety of the complaint history here in my decision or commenting on every point raised. Instead, I’ve focussed on what I consider to be the key points I need to think about in order to reach a fair and reasonable conclusion. This reflects the informal nature of this Service and our key function; to resolve disputes quickly, and with minimum formality. However, I want to assure both parties I’ve read and considered everything provided. I also will not be making a finding on any loss of rent claim, as Miss B has raised that issue as a separate complaint. Miss B says the cover provided by her policy includes malicious damage or vandalism by tenants as an insured event. She says the damage caused by the tenants was not gradual and would have caused damage instantly. And she says Admiral accepted some aspects of the claim but excluded others, which was inconsistent and unfair. Admiral says the damage claimed for is due to a gradually operating cause, where saturation occurred over a prolonged period causing mould and rot. They say the policy has a general exclusion which does not cover this type of damage. They also say certain aspects of the claim were accepted under accidental damage. I note the claim was considered under the Buildings section of the cover for “Loss or damage caused to your buildings by the vandalism or malicious acts of your tenant.” I appreciate Miss B says there is no exclusion included in this wording which would limit her claim, but Admiral has relied on a general policy exclusion which says they won’t cover: “Any loss or damage caused by anything that happens gradually, including wear and tear, wet and dry rot, or damage due to exposure to sunlight or atmospheric conditions, settlement, mildew, rust or corrosion.”

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There is no wording I've seen in the policy which says this exclusion does not apply in relation to the insured perils. So, the question for me to decide is not whether the exclusion applies in principle; it does. The question I need to decide in this complaint is whether Admiral was entitled under the policy’s terms to treat the damage to the walls and structural elements as falling within the general exclusion for damage that happens gradually. Miss B says the damage was caused by the direct and malicious actions of the tenants and then it occurred instantly when the property was saturated with urine. She says it cannot fairly be described as progressive or time related. I do not doubt the tenant's behaviour was deliberate and clearly unacceptable. However, while vandalism or malicious acts in the context of insurance coverage relates to the intention of the party to carry out intentional destructive conduct or acts, the policy exclusion focuses on how the damage occurred, not on whether the underlying act was intentional. From the evidence I've considered as part of this complaint, the damage to the plastered walls and structural elements appears to have sustained saturation and repeated exposure over time. This assessor’s report refers to saturation, penetration through flooring into ceilings, and mould development. I'm not persuaded those are features of a single one-off event and instead they are characteristic of damage that has developed over a period of time. I acknowledge Miss B maintains the accidental or malicious tenant damage is, by its nature, not progressive, but I do not agree that the evidence supports that conclusion. I think it is possible for a malicious act to result in damage that develops over time, and the exclusion is not limited to wear and tear or routine maintenance issues. Instead, it applies to anything that happens gradually and the examples given in the wording are illustrative, not restrictive. So, even if I were to accept the tenants’ actions were malicious, the resulting deterioration to the building fabric occurred progressively as urine repeatedly penetrated and remained within the structure. So, on balance, I'm satisfied it was fair and reasonable for Admiral to characterise that damage as having happened gradually and therefore subject to the policy’s general exclusion. I understand Admiral accepted that certain items were covered as accidental damage under the policy and put forward a settlement for those items. And while Miss B says that, because Admiral accepted some aspects of the claim they should have paid for the walls and ceilings as they arose from the same calls, the fact that Admiral accepted some items under the accidental damage section of cover, does not prevent them from applying the exclusion to other areas of damage if they consider that the policy supports that distinction. I also understand the items they did cover were done at Miss B’s contractor rates, which I find to be fair. So, having considered the available evidence very carefully, I find that the settlement Admiral made was a reasonable conclusion for them to take. Conclusion I want to make it clear that I recognise the circumstances of this claim are unusual and deeply distressing to Miss B, and I do not underestimate the impact this claim would have had on her. But my role is to consider whether Admiral fairly applied the policy’s terms and ultimately, I’m satisfied that they were entitled to rely on the exclusion that they did.

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I understand that this won’t be the outcome that Miss B was hoping for, but on balance, I’m satisfied Admiral’s claim decision was fair and reasonable in the circumstances.” I also requested further information on the settlement offer of the items Admiral had accepted under the policy. Admiral clarified that the settlement they issued for the works they had agreed to cover of £979.52 had been based on the costs from Miss B’s estimate and also an allowance was included for a small area of sub flooring in the hallway. But Admiral did say that an additional uplift of £200 had not been included in this figure and settlement should have been a total of £1,179.52. Miss B provided detailed responses and said she did not agree with my provisional decision, the main points of which were that: • Admiral had accepted the cause of damage but had unfairly limited the scope of what they were prepared to assess and settle. • Admiral had been made aware of additional damage as the claim progressed. • Admiral had been informed of the increased extent of damage before issuing their settlement, and had agreed to include this but then had failed to do so. • The decision to cover some parts of damage but exclude others was unfair as the exposure time to urine of the chipboard flooring beneath the carpet was longer than the exposure time of the floorboards and the joists beneath the chipboard flooring. • My provisional decision hadn’t properly taken into account items such as wooden flooring, joists, and plaster affected by the urine. • Admiral hadn’t made payment for the damages it had accepted based on Miss B’s contractor’s quote and instead based them on their own rates and ignored elements of her estimate. • Admiral’s explanation of how their settlement was calculated was inaccurate and didn’t reflect the estimates she had provided. Ultimately, Miss B maintained that the damage caused by the tenants was covered by the policy with Admiral and they had acted unfairly by only covering some of the damage. And she said Admiral had received all quotes and estimates from Miss B’s contractors and needed to pay an additional £6,210.48 to conclude things. As both parties have now had the opportunity to provide a response to my provisional findings, I will set out my final decision below. 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 carefully considered Miss B’s response to my provisional findings. But having done so, I have reached the same outcome I did previously. I’ll explain why. I appreciate that Miss B says that all of the damage caused to her property should be covered by the policy, because it all arose from the same cause. But as I explained in my provisional decision, a single cause of damage doesn't necessarily mean that all resulting damage will then be covered. And ultimately, the policy only provides cover for damage that meets the terms, and I think it's fair that insurers entitled to distinguish between items they considered to be covered and those that they do not.

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I’ve considered Miss B’s submissions around her making Admiral aware of further damage before they issued their settlement offer; she says Admiral agreed she could proceed with repairs but then failed to include some of these items in their settlement. However, even where I accept that Miss B raised additional damage to Admiral’s attention before they issued their settlement, that doesn’t mean Admiral would be required to include all of that damage within the scope of cover given the policy’s exclusions. As I’ve set out above, the key issue is whether the damage is covered by the policy, not whether it was reported or not. And as I explained in my provisional decision; I’m satisfied the damage Admiral declined to cover was fairly excluded under the policy’s terms. I also haven’t seen anything in Miss B’s further submissions that persuades me to reach a different conclusion on this point. I’ve also considered Miss B’s additional submissions around taking into account damage to items such as wooden flooring, joists, and plaster. But for the reasons I set out in my provisional decision, I'm ultimately not persuaded that these items were included in the scope of cover under the policy. So, while I understand why Miss B considers these items should be included, I don't think it was unfair for Admiral to decline them. Finally, I’ve looked at the items Admiral did accept under the claim and how they settled those items. Miss B has set out that Admiral didn't pay for the items they had accepted based on her contractor’s quote and instead relied on their own figures and ignored elements of her estimate. I've seen evidence which shows that Admiral made an initial assessment and then revised their settlement after receiving Miss B’s contractor’s estimate. So, I'm satisfied the settlement Admiral put forward reflects the information available to them for the items they had accepted under the policy. And I don't think the timing issues Miss B has raised demonstrates that Admiral acted unfairly in the way they assessed and settled parts of the claim they had accepted. Having considered the information provided, I'm satisfied Admiral based their settlement on Miss B’s contractor estimates for the item they agreed to cover. The settlement they raised at £979.52 reflects those accepted works, together with an additional allowance for subflooring. Admiral also said they would agree to cover any additional reasonable costs for the sub floor works in the hallway based on Miss B’s costs; and have reached out to their supplier to confirm this, which I find to be fair. Admiral has also confirmed that a further uplift of £200 would be included for skirting boards and floor repair. I think it's fair that Admiral pays the additional £200 for those works if they haven't done so already. Aside from that adjustment, I'm satisfied Admiral has shown the settlement for the accepted items was calculated fairly. Overall, I'm satisfied Admiral assessed the claim in line with the policy's terms and reached a reasonable position on what they were prepared to cover which was supported by the available evidence. So, for the reasons I have set out, I remain satisfied that Admiral acted fairly and I do not direct them to pay for the additional items Miss B has claimed for, save for the additional £200 I have outlined above if it hasn’t been raised already. My final decision For the reasons I’ve set out above, my final decision is that I do not uphold this complaint.

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Under the rules of the Financial Ombudsman Service, I’m required to ask Miss B to accept or reject my decision before 20 May 2026. Stephen Howard Ombudsman

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