DRN-6252606

The complaint Mr G and Mr L complain about what AXA Insurance UK Plc did after they claimed on their ‘Commercial and Residential Landlords’ insurance policy. Although the policy is in joint names as the complaint has been brought by Mr G I’ll mainly refer to him in this decision. What happened Mr G is a landlord. In March 2023 he contacted AXA as he’d been notified of a potential claim against him. That was brought by solicitors on behalf of his tenants. It alleged there was disrepair at the property (including mould and damp) which resulted in personal injury to the tenants. AXA said it would investigate and asked the third party solicitors to formally submit the claim. It doesn’t appear there was further contact from those solicitors until they provided medical reports in November 2023. At the same time they made a settlement offer to Mr G of £23,000. In January 2024 a claims investigator produced a report which advised AXA should defend the claim. However, as no further contact had been received from the third party solicitors the claim was closed by AXA in May 2024. It was reopened following further contact from them in July. AXA reviewed the medical reports previously provided and concluded the claim wasn’t covered. There wasn’t evidence of bodily injury to the tenants (which the policy required) and disrepair claims weren’t covered. As Mr G was unhappy with that decision AXA obtained legal advice which supported its position. However, it accepted there had been delays and other customer service issues in its handling of the claim. It offered to pay Mr G £600 in recognition of the impact of those. He didn’t agree the claim decision was correct and said the delay in providing information about that meant he had to appoint a solicitor at short notice which had been stressful. The claim had ultimately been settled for £11,000 and he thought AXA should contribute £7,000 to cover the personal injury aspect of that. Our investigator said Mr G’s policy didn’t include legal expenses insurance. So it had correctly been considered against the ‘Property Owners Liability’ section. That didn’t cover a disrepair claim but could cover bodily injury. However, the medical evidence here referenced psychological injury and AXA had legal advice which said (in the circumstances of this case) that didn’t meet the definition of bodily injury. He thought AXA had correctly turned down the claim. But there had been around six months of delay by AXA in reviewing the medical information along with other customer service issues. He didn’t think that impacted the overall outcome of the claim but accepted it caused Mr G avoidable distress and inconvenience. However, the £600 AXA had already offered did enough to put things right. Mr G didn’t agree. So I need to reach a final 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.

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The relevant rules and industry guidelines say AXA has a responsibility to handle claims promptly and fairly. It shouldn’t reject a claim unreasonably. I’ve looked at the terms and conditions of Mr G’s policy. The relevant policy schedule says it doesn’t include legal expense cover but does include ‘Property Owner’s Liability’. I think AXA was right to conclude that was the only section of cover that could apply to the claim made against Mr G. However, none of the insured events within that section would cover a disrepair claim. The only claim that could potentially be covered would be one that related to “accidental bodily injury”. The policy defines ‘bodily injury’ as “Death, bodily injury. Illness or disease”. The initial letter of claim linked the disrepair at the property (which it said included damp and mould) to allergies, breathing problems and skin problems affecting the tenants. I think it was reasonable of AXA to initially conclude this was something the policy might cover as those conditions would likely fall within the definition of illness. However, I understand the claim which was then progressed was based on the medical reports produced in August 2023. Those identified both tenants had suffered from slight anxiety and low mood as a result of the problems at the property. So it was those psychological issues that then formed the basis of their personal injury claim against Mr G. The legal advice AXA obtained advised that in the circumstances of this case the psychological issues identified in the medical reports wouldn’t fall within the definition of bodily injury the policy contained. The advice noted in particular that the medical reports didn’t provide a diagnosis of any recognised psychological injury. In the absence of any contrary legal advice I think it was reasonable of AXA to conclude these claims didn’t meet the policy definition of bodily injury. And they wouldn’t be covered under the ‘Property Owner’s Liability’ section of cover. However, I agree there were failings by AXA prior to that decision being reached. It’s accepted it should have been clearer from the outset the disrepair claim wouldn’t be covered by the policy at all. And the medical reports, which were key to understanding what personal injury claim was being pursued, were sent to AXA in November 2023 but don’t appear to have been properly reviewed until July 2024. I appreciate that was in part because further contact hadn’t been received from the third party solicitors. But given a review of the case in January 2024 identified these reports had been provided I think AXA should have looked at them sooner and advised Mr G that, based on the information they contained, his claim wasn’t one his policy would be able to assist with. I’ve gone on to consider the impact of those failings on Mr G. He says he didn’t engage with the settlement offer made in November 2023 because he believed AXA would be dealing with the claim. But even if that is the case the claim was eventually settled for a sum significantly less than the offer made at that time. So I’m not satisfied his legal position has been prejudiced by what AXA got wrong. But I do accept AXA’s failing put Mr G under pressure to find his own solicitors at short notice in order to address an approaching court deadline. I recognise that will have been very stressful and if he’d known earlier the claim wasn’t covered he could have appointed solicitors in a more measured way. But I’ve haven’t seen clear evidence of a direct financial loss to Mr G as a result of that. And AXA has already offered £600 to recognise the distress and inconvenience he was caused by what it got wrong. I think that’s reasonable in the circumstances of this case. And taking into account that Mr G’s claim isn’t one his policy covers there aren’t grounds on which I could reasonably require AXA to contribute to the settlement of the personal injury claim.

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My final decision AXA Insurance UK Plc has already made an offer to pay £600 to settle the complaint and I think this offer is fair in all the circumstances. So my decision is that AXA should pay Mr G and Mr L £600 (if it hasn’t already done so). Under the rules of the Financial Ombudsman Service, I’m required to ask Mr G and Mr L to accept or reject my decision before 20 May 2026. James Park Ombudsman

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