DRN-6176029

The complaint Mr L and Miss P have complained about the amount QIC Europe Ltd settled a claim for under their home insurance policy. Any reference to QIC also includes the actions of their agents. What happened Mr L and Miss P had two leaks in their basement which they discovered in early 2023 – one from the sink waste in the kitchen and the other from the washing machine in the utility room. When the leaks were fixed, a surveyor told them the leaks had caused the wooden floorboards and joists to rot. Mr L and Miss P claimed on their home insurance with QIC for the damage. QIC considered the claim but declined it because their surveyor told them moisture came from the ground, which caused the joists to rot. Mr L and Miss P had their own assessment done, and QIC then agreed to cover some of the damage – but not any damage underground. Mr L and Miss P referred a complaint about that to this Service, and an Ombudsman colleague required QIC to reimburse Mr L and Miss P for the amount they spent repairing the damage to their floor. QIC considered the cost of repairing the floor but declined to pay other costs involved in repairing Mr L and Miss P’s basement. Mr L and Miss P thought QIC should be paying for the full cost to repair their basement but QIC didn’t agree to this, so Mr L and Miss P made another complaint. When the complaint was referred to this Service, an Investigator looked into the settlement and thought QIC should be paying all of Mr L and Miss P’s costs and £500 compensation. QIC disagreed, saying they’ll only pay for the flooring, that it would be betterment to pay the full cost of the works, and they could have had the repairs done for significantly less than what Mr L and Miss P paid their contractors. The complaint couldn’t be resolved, so it has come to me to decide. 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 ours is an informal service, I’m not going to comment on every point or piece of evidence Mr L, Miss P and QIC sent us. Instead, I’ve focused on what I consider to be key or central to the complaint. But I’d like to reassure the parties that I have considered everything submitted. As QIC has disagreed with the Investigator for three main reasons, I will consider each reason in turn. Were all repairs claim related?

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In November 2023, QIC told Mr L and Miss P they were accepting the claim, in part. They said they’d cover base units in the kitchen area, tiled flooring and all associated works and materials to facilitate these repairs in both the kitchen and adjacent utility (in other words, the above ground level damage). But they declined the damage to the floor (in other words, the below ground level damage). My colleague considered a complaint about that and decided QIC should pay for repairing the basement floor (including floor joists). This was because, in brief, she was satisfied the damage was claim-related and it was unfair for QIC to rely on a gradual damage exclusion. Based on what I’ve seen, I’m satisfied the repairs were claim related as they correspond to the damage identified by QIC and Mr L and Miss L’s surveyor. It follows I don’t think it was fair and reasonable for QIC to decline any part of the scope of work Mr L and Miss P sought to have done. Was it fair for QIC to reduce their offer of settlement due to betterment? QIC said some of the repairs, like the replacement of the kitchen, were unnecessary. I’m not persuaded this is the case. QIC recorded damage to some of the kitchen units following the escape of water – and Mr L and Miss P and their surveyors have persuasively explained why extensive remedial works were needed and that the kitchen needed removing to enable the repairs to the flooring to be completed and to make the basement habitable. There were times the works needed to account for upgrading certain aspects to meet modern building standards, but I’m satisfied this will have been necessary to provide a lasting and effective repair – and this is what I would have expected QIC’s agents to have done. Based on what I’ve seen, I’m not persuaded QIC have shown some repairs weren’t essential and I’m satisfied upon completion of the works Mr L and Miss P’s property was materially returned to its pre-loss condition, and not materially enhanced. Would it be fair to settle the claim for the amount Mr L and Miss P paid? QIC said they had an estimate done for the works, including the replacement of the kitchen, which came in at less than half of what Mr L and Miss P paid their contractor. And they think they’re being asked to pay more than they reasonable should. I accept QIC could likely have completed the works for less than Mr L and Miss P paid. But by declining to complete the repairs themselves, using their network, they left Mr L and Miss P with no option but to make their own arrangements. That’s what Mr L and Miss P did, and I’ve been presented with no compelling evidence that they didn’t try to keep costs down where possible. I’m aware, for example, they used a project manager to keep works on track and within budget, and reused items and materials where they could. Overall Mr L and Miss P had an escape of water, and I think QIC unfairly declined part of the claim. This meant they needed to arrange and pay for the repairs themselves. I don’t think QIC have shown the repairs have led to betterment. So, to fairly indemnify Mr L and Miss P for their loss, I find QIC should reimburse their claim costs, plus interest from the date they paid each invoice to the date they’re reimbursed. Mr L and Miss P’s claim has been going on since 2023, and I think they will have suffered significant inconvenience in having to arrange the work themselves. I think the Investigator’s suggested £500 compensation is reasonable in the circumstances and I’m directing QIC to pay it to Mr L and Miss P.

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My final decision For the reasons above, I uphold this complaint and direct QIC Europe Ltd to: • Pay Mr L and Miss P’s claim costs in full, plus simple interest* at 8% a year from the date invoices were paid to the date of settlement • Pay Mr L and Miss P £500 compensation. *If QIC Europe Ltd think they’re required by HM Revenue & Customs to deduct income tax from that interest, they should tell Mr L and Miss P how much they’ve taken off. They should also give Mr L and Miss P a tax deduction certificate if they ask for one in order to reclaim the tax if appropriate. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr L and Miss P to accept or reject my decision before 22 May 2026. Andrew Wakatsuki-Robinson Ombudsman

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