DRN-6281290

The complaint S, a limited company, complains Intact Insurance UK Limited turned down a claim it made on its business protection insurance policy. S is represented by its director Mrs K. What happened S is a beauty business. In November 2025 it claimed on its policy as a treatment machine had stopped working. Unhappy with the progress of the claim S complained about delay in a decision being reached. That issue has been separately considered by our service. In February 2026 a specialist repair firm identified a loose power connector which was reconnected. However, Mrs K says when she then used the machine there was a smell of burning indicting a serious electrical fault. She thought Intact should replace it. Intact said S’s policy did include cover for ‘Accidental Damage’ which would cover physical damage caused by mistake. However, in this case the repair firm hadn’t identified any evidence of physical damage to the machine. It thought it most likely the issue was caused by an internal electrical fault. And the policy excluded claims which arose from mechanical, electrical or electronic breakdown. It didn’t think S’s claim was one its policy covered. Our investigator agreed the relevant section of cover was ‘Accidental Damage’. But he thought it most likely the problem resulted from mechanical or electrical breakdown within the treatment machine. So he thought it reasonable of Intact to say the claim wasn’t covered and it acted fairly in declining this. Mrs K didn’t agree. She said the machine had failed as a result of sudden water leakage during use which constituted an accidental event rather than a general breakdown. Prior to the incident the machine had been functioning normally and the failure was immediate, unexpected and occurred during normal use. It resulted from sudden escape of water which caused damage to it. The machine had subsequently failed again after the connector was repaired indicating the issue was a more significant damaging event. And she outlined the impact its failure had. 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. The relevant rules and industry guidelines say Intact has a responsibility to handle claims promptly and fairly. It shouldn’t reject a claim unreasonably. S’s policy covers ‘Damage’ (defined as “accidental loss, destruction or damage”) to trade contents. I don’t think it’s in dispute the treatment machine would fall within the definition of trade contents. However, for cover to be available the cause of the damage needs to fall within one of the contingencies listed in the policy. And the onus is on a policyholder to show, on balance, that one of those insured events has taken place. If they’ve done so and an insurer believes an exclusion or condition means the claim isn’t payable the onus is on them to show (on balance) it applies.

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In this case S said the policy covered damage from “any accidental cause” and the repairs to its machine should be covered by that. Intact hasn’t argued the damage wasn’t accidental so cover could potentially be available under this part of the policy. However, it contains a number of exclusions which include damage consisting of “mechanical or electrical breakdown or derangement in respect of the particular machines, apparatus or equipment, in which such breakdown or derangement originates”. In this case I think Intact are correct to say there isn’t evidence of external physical damage to the treatment machine (which is something the policy could cover). The expert report provided to it found the problem was caused by a high power connector which had come loose within it. I think that’s something which would be caught by the mechanical breakdown exclusion S’s policy contains. And the engineer who inspected the machine says the machine was in full working order when they left. Mrs K says when she subsequently tried to use the machine it didn’t operate and she could smell burning. Both she and Intact agree the likely cause of that is an electrical fault. But that wouldn’t be covered under the ‘accidental cause’ part of the policy because of the exclusion for electrical breakdown Intact has already referenced. I’ve thought about whether it could be covered under any of the other contingencies the policy contains. Mrs K says when the initial incident occurred she saw water leaking from the machine. And the policy does separately cover damage caused by escape of water “from any tank, apparatus or pipe”. So if the current problem with the machine results from that initial escape of water that is something which might be covered by the policy. The difficulty for S is there isn’t clear evidence to show that’s the case. The expert report Intact obtained doesn’t reference any water damage to the machine and found it to be in full working order after the problem with the high power connector had been fixed. S has provided its own report (which predates that obtained by Intact). That did find there had been a water leak from the high power connector. But it also said the issue had been fixed and the machine was working and in good condition. What hasn’t been provided is a report after the machine subsequently failed again which identified the cause of that problem. And, as I’ve said, it is for S to show an insured event (which in this case would be damage caused by escape of water) has taken place. So I don’t think Intact was at fault in declining the claim based on the available evidence. However, it’s confirmed to us that if S is able to provide its own report which shows the problem with the machine does result from an insured peril (for example an escape of water) it would reconsider the claim. And it would also consider reimbursing the cost of that report. I appreciate the ongoing problem with the machine are causing S significant financial difficulties so this may provide a way forward if it does wish to progress its claim with Intact. My final decision I’ve decided not to uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask S to accept or reject my decision before 26 May 2026. James Park Ombudsman

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