Dementia, delay and the storm claim
Mrs Ada Lewis, 78, has a home insurance policy with a 30-day notification condition. In January a storm lifts roof tiles and water enters the loft, damaging ceilings. Mrs Lewis has early-stage dementia and is admitted to hospital for three weeks. Her daughter, who lives abroad, visits in May and finds the damage. She calls the insurer on 12 May; the insurer declines for late notification, saying the condition is a condition precedent to liability and prejudice is presumed. Call notes show Mrs Lewis had called in February and said 'something about the roof' but the agent did not log a claim or send a form. The insurer's vulnerable-customer policy requires reasonable adjustments, including allowing a representative to act. The damage has worsened because the leak was not repaired. The claim is £28,000; the insurer says it would have paid £19,000 if notified promptly. Mrs Lewis complains.
1. Assess whether the insurer can rely on the late-notification condition, considering the Insurance Act 2015 and FCA rules.
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The notification term. A 30-day notification clause is a term that is not directly relevant to the actual loss; it is a claims-handling condition. Under the Insurance Act 2015, an insurer cannot rely on such a term to deny liability unless the breach caused prejudice. The insurer must show what difference late notification made. Here it says it would have paid £19,000 promptly but the claim is now £28,000. The £9,000 difference is the prejudice it alleges, but it must prove that the deterioration was caused by the delay and not by the original storm or Mrs Lewis's circumstances.
Condition precedent wording. Even if the policy calls the term a condition precedent, the statutory prejudice test still applies to a term not relevant to the actual loss. The insurer cannot simply assert 'prejudice is presumed'. It must investigate. The February call is important: the insurer had notice, through its own agent, that something was wrong with the roof. If the agent failed to act, that may reduce or eliminate prejudice.
Vulnerability. FCA rules require firms to treat customers fairly and to make reasonable adjustments for vulnerable customers. Mrs Lewis's dementia and hospital admission are known or reasonably discoverable. The insurer's own vulnerable-customer policy required it to allow a representative to act. Declining on a technicality without considering those adjustments is likely to breach the fair-treatment principle and the Consumer Duty.
2. What does the Consumer Duty require in handling the complaint and remediation?
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Consumer Duty. The insurer must act in good faith, avoid foreseeable harm, and enable customers to pursue their financial objectives. For a vulnerable customer, that means considering the customer's understanding, the impact of the condition, and whether the firm's processes caused or worsened the harm. The February call shows a service failure: the agent did not log a claim or send a form. The insurer cannot rely on a process failure that it caused.
Complaint handling. The complaint must be investigated promptly, fairly and with the customer's vulnerability recorded. The insurer should review the call recording and notes, check whether Mrs Lewis was told what to do, and consider whether a representative should have been appointed. It should not require Mrs Lewis to prove capacity or provide unnecessary medical evidence. The response should explain the decision clearly and offer a remedy.
Remediation. If the insurer concludes that the delay caused £9,000 of prejudice, it should still consider whether that prejudice was avoidable. A fair outcome may be to pay the full £28,000, or at least the £19,000 it would have paid plus a contribution to the deterioration, and to correct the February call failure. The insurer should also review its vulnerable-customer processes and root-cause the failure to log the call. Interest and any consequential costs should be considered.
3. What practical outcome would you recommend, and what risks arise if the insurer maintains its decline?
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Recommended outcome. The insurer should uphold the complaint and pay the claim. The strongest points are the February call, the known vulnerability, the insurer's own policy requiring reasonable adjustments, and the statutory prejudice test. The insurer had notice and failed to act. The £9,000 prejudice figure is not a safe basis for denial because the insurer contributed to the delay. A proportionate settlement would be the full £28,000, or at minimum £19,000 plus a fair amount for the deterioration, with an apology and an explanation of the process changes.
Risks of maintaining the decline. The customer may refer the complaint to the Financial Ombudsman Service. The ombudsman is likely to focus on fairness, vulnerability and the insurer's own handling. A decline based on a presumed prejudice is vulnerable to challenge under the Insurance Act 2015. The FCA could also view the case as a Consumer Duty failure, particularly if the insurer's vulnerable-customer policy was not followed. There is a risk of a wider review of similar claims and of remediation costs.
Practical steps. Record the vulnerability, preserve the call notes, check whether the February call was a notification, and consider whether the agent should have sent a form. The insurer should also check whether the damage could have been mitigated earlier and whether any part of the £9,000 is attributable to Mrs Lewis's own delay. Any reduction should be explained transparently and should not rely on a presumption.