Financial & Legal Insurance Company Ltd · DRN-5990370

The complaint Mr L is unhappy with what Financial & Legal Insurance Company Ltd did after he made a claim on his rent guarantee and legal expenses insurance policy. What happened In April 2024 Mr L sought assistance from his policy as the tenant of his rented property was in rent arrears. Financial & Legal referred the matter to a legal firm. It progressed possession proceedings and the tenant left the property at the end of September. Mr L also made a rent guarantee claim. After obtaining further information from him about the arrears it paid a total of £1,470 (in three separate payments). Mr L didn’t think Financial & Legal had covered all of the outstanding arrears. And he said the tenant left the property in a state where it couldn’t be let. He thought the policy should cover the rent he’d missed out on until the necessary repairs were carried out. Our investigator thought it was reasonable of Financial & Legal to have offset the tenant’s deposit, which Mr L had recovered, against the outstanding arrears. The payments it had made covered the remaining arrears that accrued prior to vacant possession being obtained. And the property ‘check out’ report didn’t evidence there had been a material change in its condition. She wasn’t satisfied damage caused by the tenant prevented it being relet and didn’t think Financial & Legal needed to make further rental payments to Mr L. But it should pay him £150 in recognition of some poor communication. Financial & Legal agreed to do so. Mr L didn’t agree. He said there were outstanding arrears as the payments didn’t cover the full period until his tenant left the property. He didn’t agree the condition of the property at that point reflected normal wear and tear and said the tenant had caused damage to the lino, the toilet cistern and a fridge. And he’d had to remove some of her belongings from the property. He said the policy definition of damage hadn’t been made clear to him when the policy was sold and didn’t agree the proposed compensation did enough to put things right. 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.

-- 1 of 3 --

The relevant rules and industry guidelines say Financial & Legal has a responsibility to handle claims promptly and fairly. It shouldn’t reject a claim unreasonably. I’ve looked first at the terms and conditions of Mr L’s policy. His concerns are about the payments made under the rent guarantee section of the policy. In relation to that it says where a claim has been accepted under the repossession section of the policy (which I understand was the case here) “the insurer will pay up to the limit of indemnity…unpaid rent which is due to you under the terms of a tenancy agreement up to the limit of indemnity until our appointed adviser obtains vacant possession of your insured property”. I don’t think it’s in dispute vacant possession of the policy was obtained on 26 September 2024. So it’s unpaid rent up until that date which the policy would cover. I’ve reviewed rent statements which show that in the period from 1 November 2023 until 3 September 2024 there was unpaid rent of £1,470. However, as rent was due on the 4th of the month then, as Mr L has said, the tenant would also be liable for a further period until she left the property on 26 September. The rent statement shows that to be £449.92 meaning the total outstanding was around £1,919. Financial & Legal has made payments to Mr L for rent arrears totalling £1,470 which covers the amount due until 3 September 2024. It hasn’t made a further payment. But I don’t think it needs to do that. Mr L recovered the tenant’s deposit and the solicitors acting for him told Financial & Legal he’d offset that against the rent. As that amount covered the remaining arrears there isn’t an outstanding amount Financial & Legal needs to cover. The policy also pays “50% of the monthly rent that would have been due to you for a maximum of three months or until your insured property is ready to be re-let, whichever happens sooner, if you are not able to re-let your insured property immediately once vacant possession has been obtained due to damage or neglect caused by the former tenant” Mr L says that applies here because he wasn’t able to relet the property because of issues caused by the former tenant. And the policy definition of ‘damage’ wasn’t made clear to him when he took it out. I’ve reviewed the policy and it doesn’t contain a specific definition of damage. So I think the key question is whether in applying that term Financial & Legal has placed a reasonable interpretation on it. In my view it would appropriately apply where there was physical harm to a property that resulted from a tenant's negligence, misuse, or intentional actions and went beyond normal wear and tear. In this case Mr L’s concerns relate to the lino, toilet cistern and the fridge. However, while I don’t doubt he had to take action to resolve those issues the property ‘check out’ report doesn’t identify significant issues at the property which would go beyond expected wear and tear. In particular, while it found some sign of wear to the flooring it said its overall condition was either fair or good. It didn’t find an issue with the fridge. It did find a problem with the toilet flush but said that was present when the property was let. And while the tenant may have left some of their belongings in the property I don’t think that would reasonably constitute physical damage to it. I think Financial & Legal has fairly concluded Mr L wasn’t due further payments under this part of the policy. I agree Financial & Legal’s communication with Mr L should have been better. It’s accepted it didn’t always make clear why it needed information from him. In addition, on some occasions, it appears to have requested details from him which he’d already provided. I accept that will have been frustrating for him and will have caused him avoidable inconvenience. But, on balance, I think the £150 our investigator recommended does enough to recognise the impact on him of what Financial & Legal got wrong.

-- 2 of 3 --

My final decision I’ve decided to uphold this complaint. Financial & Legal Insurance Company Ltd will need to put things right by paying Mr L £150. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr L to accept or reject my decision before 20 February 2026. James Park Ombudsman

-- 3 of 3 --