Unpaid insurance settlement — should I pursue court action or the Ombudsman

knowledgeseeker365

Background (home-insurance claim)

• Escape-of-water claim covering a new kitchen and bathroom.

• Insurer accepted liability; I supplied quotes and they offered a “full and final” cash settlement, which I accepted.

• Despite repeated assurances (“payment in 3–5 working days”), no money has ever arrived.

• Instead, the claims team later tried to “re-open” the claim, demanding extra photos/videos. I refused, citing breach of contract and the original settlement agreement.

• All further emails and calls from me were ignored causing unnecessary delays throughout.

What I’ve done so far

1. Subject Access Request (SAR) – asked for all notes and call recordings.

• They missed the statutory deadline, then when threatened to be taken to ICO, they produced everything except the key call in which the settlement was agreed.

• I gave extra time; still no recording.

Formal complaint – raised under:

• Section 13A Insurance Act 2015 (payment within a reasonable time).

• FCA Handbook PRIN 2.1.1 R & DISP (handle claims promptly and fairly).

• Insurer’s own complaint procedures.

• Insurer Acknowledged, with a promise of a reply in 10 working days but missed this voluntary deadline.

Letter before action – sent after three months of insurer ignoring all communications.

• Same day, the complaints manager asked for “more time”.

• Next day I received calls from un-recorded mobile numbers, again requesting photos/videos. I declined asking them to liaise with complaints manager, further quoting their conduct equates to  tactical opening of the case.

• I informed them that I have kept the voicemails as evidence which may be produced as a part of complaint to court or an ombudsman.

Current position

• Claim unresolved >3 months.

• Complaint unresolved; the insurer’s eight-week FCA deadline expires very soon.

• SAR incomplete - The data controller released all records apart from the crucial settlement call recording, though it seems dodgy I cannot prove it is malicious so I contacted them again to address my concern and release the call as part of SAR.

• I’m preparing to report the SAR breach to the Information Commissioner’s Office (ICO).

---

My question

Should I:

1. Issue court proceedings now for breach of contract / late payment under s13A (plus interest and costs); or

2. Wait until the eight-week complaint window closes, then refer the matter to the Financial Ombudsman Service (FOS)?

Any pros/cons—or alternative routes—would be hugely appreciated. Thanks in advance for your guidance!

dunstonh

Issue court proceedings now for breach of contract / late payment under s13A (plus interest and costs); or
Wait until the eight-week complaint window closes, then refer the matter to the Financial Ombudsman Service (FOS)?

Waiting for the FOS would be the logical option, as you are on weaker ground if you go to court.

FOS is more consumer-biased than the courts.  It's an independent arbiter, but it takes into account fairness, which the court does not.  Additionally, it is risk-free and without-cost for you, unlike the courts.

Instead, the claims team later tried to “re-open” the claim, demanding extra photos/videos. I refused, citing breach of contract and the original settlement agreement.

Insurers can reopen a complaint and change their mind, but there has to be a valid reason for doing so.

If you have not engaged with them on that, then you are as guilty as they are for not responding to you.   They will likely respond to both the FOS and the courts, if you took it that far, that they have attempted to contact you multiple times, but you would not respond to them, or you would refuse to engage and that you have been difficult to deal with.

Hoenir

You've gone to extraordinary lengths when simply providing extra photos/videos. would have quickly resolved matters. Looking in from the outside the natural inclination in such circumstances to raise doubts and red flags in the minds of others. 

DullGreyGuy

knowledgeseeker365 said:

Draft question for the MSE Forum (tidied for clarity & consistency)

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Background (home-insurance claim)

• Escape-of-water claim covering a new kitchen and bathroom.

• Insurer accepted liability; I supplied quotes and they offered a “full and final” cash settlement, which I accepted.

• Despite repeated assurances (“payment in 3–5 working days”), no money has ever arrived.

• Instead, the claims team later tried to “re-open” the claim, demanding extra photos/videos. I refused, citing breach of contract and the original settlement agreement.

• All further emails and calls from me were ignored causing unnecessary delays throughout.

What I’ve done so far

1. Subject Access Request (SAR) – asked for all notes and call recordings.

• They missed the statutory deadline, then when threatened to be taken to ICO, they produced everything except the key call in which the settlement was agreed.

• I gave extra time; still no recording.

Formal complaint – raised under:

• Section 13A Insurance Act 2015 (payment within a reasonable time).

• FCA Handbook PRIN 2.1.1 R & DISP (handle claims promptly and fairly).

• Insurer’s own complaint procedures.

• Insurer Acknowledged, with a promise of a reply in 10 working days but missed this voluntary deadline.

Letter before action – sent after three months of insurer ignoring all communications.

• Same day, the complaints manager asked for “more time”.

• Next day I received calls from un-recorded mobile numbers, again requesting photos/videos. I declined asking them to liaise with complaints manager, further quoting their conduct equates to  tactical opening of the case.

• I informed them that I have kept the voicemails as evidence which may be produced as a part of complaint to court or an ombudsman.

Current position

• Claim unresolved >3 months.

• Complaint unresolved; the insurer’s eight-week FCA deadline expires very soon.

• SAR incomplete - The data controller released all records apart from the crucial settlement call recording, though it seems dodgy I cannot prove it is malicious so I contacted them again to address my concern and release the call as part of SAR.

• I’m preparing to report the SAR breach to the Information Commissioner’s Office (ICO).

---

My question

Should I:

1. Issue court proceedings now for breach of contract / late payment under s13A (plus interest and costs); or

2. Wait until the eight-week complaint window closes, then refer the matter to the Financial Ombudsman Service (FOS)?

Any pros/cons—or alternative routes—would be hugely appreciated. Thanks in advance for your guidance!

The FOS is required to find a fair outcome, the courts apply the letter of the law. 

Which term of your insurance policy do you believe they have breached? Normally insurance policies are written very much that the insurer is in control of the claim and I've never seen one that states it will be settled in X days as that would be a foolish thing to do. 

Your settlement agreement isnt a contract as you are not providing any consideration and it's not been executed as a deed, which doesnt need consideration, as you say it was verbal whereas a deed requires witnessed signatures. 

The FOS accepts that insurers are run by humans and that humans can make a mistake so won't make an insurer do something just because a call centre agent said they would. It will however consider the consequences that the broken word/promise has caused, eg if you'd gone out and bought a replacement on credit card expecting the cash would be coming shortly to pay it off then the ombudsman may consider if the insurer should repay the credit card interest which is a direct result of their broken promise. 

SK911

Hi KnowledgeSeeker365,

I’m a qualified insurance loss assessor specialising in domestic buildings insurance claims. Based on your situation, I would strongly advise not to accept a full and final settlement unless you’re absolutely certain all reinstatement costs have been properly accounted for.

The reason we caution against it is because once you begin reinstating your property, you may uncover additional damage or necessary work that wasn’t included in the insurer’s settlement. At that point, you won’t be able to claim further funds, and the insurer may require you to submit a new claim — which would likely mean paying another excess and potentially affecting your policy terms.

That said, it’s not too late to withdraw your acceptance of the full and final settlement. I recommend writing to your insurer (email is fine) to formally retract your acceptance and request that the claim remains open until full reinstatement is complete and all damage has been assessed.

At this stage, your best course of action would be to:

1. Send a final letter of complaint to the insurer, clearly setting out what you believe is a fair and reasonable settlement amount.

2. If they still don’t respond appropriately, escalate the matter to the Financial Ombudsman Service via their online complaints process

You also have the option of appointing a reputable loss assessor to help manage the claim on your behalf. Look for firms whose logo features a maroon and gold house (ask for Walthamstow)— they’re known in the industry and should be able to assist with assessing the full extent of your loss and negotiating with the insurer.

Happy to answer any further questions if needed.

Wishing you the best of luck in resolving this.

knowledgeseeker365

dunstonh said:

Issue court proceedings now for breach of contract / late payment under s13A (plus interest and costs); or
Wait until the eight-week complaint window closes, then refer the matter to the Financial Ombudsman Service (FOS)?

Waiting for the FOS would be the logical option, as you are on weaker ground if you go to court.

FOS is more consumer-biased than the courts.  It's an independent arbiter, but it takes into account fairness, which the court does not.  Additionally, it is risk-free and without-cost for you, unlike the courts.

Instead, the claims team later tried to “re-open” the claim, demanding extra photos/videos. I refused, citing breach of contract and the original settlement agreement.

Insurers can reopen a complaint and change their mind, but there has to be a valid reason for doing so.

If you have not engaged with them on that, then you are as guilty as they are for not responding to you.   They will likely respond to both the FOS and the courts, if you took it that far, that they have attempted to contact you multiple times, but you would not respond to them, or you would refuse to engage and that you have been difficult to deal with.

Thanks for your response – I appreciate your perspective and will certainly keep your advice in mind as I consider my next steps.

 In my case, the insurer made a full and final settlement offer and confirmed that payment would be made within 3–5 days. However, the payment never arrived. It was actually me who followed up with them to chase the delayed payment. In response, they unexpectedly requested additional videos – even though the claim had already been settled and the payment deadline had passed.

 To me, this appears to be a tactical attempt to reopen a resolved claim, without any valid reason provided. As you rightly said, there must be a clear justification for reopening a claim – but none has been offered. Instead, their only communication has been repeated requests for further photos and videos, despite a previously agreed settlement.

 I raised a formal complaint regarding the non-payment. When their voluntary deadline passed, I sent a reminder which was ignored. I then issued a letter before action. Only at that point did another agent reach out – again asking for images, rather than addressing the outstanding payment and other issues raised in complaint.

 So, to clarify: I did engage – by chasing the payment, lodging a formal complaint, and issuing a pre-action letter. Their ongoing contact has not been to resolve the payment issue, but instead to delay or deflect it by requesting additional photos/videos without explanation. 

knowledgeseeker365

Hoenir said:

You've gone to extraordinary lengths when simply providing extra photos/videos. would have quickly resolved matters. Looking in from the outside the natural inclination in such circumstances to raise doubts and red flags in the minds of others. 

Pictures and videos were provided at the outset, but the insurer still delayed the process by over 45 days before eventually making a settlement offer. Had they given a valid reason for requesting further evidence, I might have been willing to engage. However, asking for additional photos or videos after the case had been settled, and only once I began chasing the delayed payment, comes across as deliberate delay tactics by reopening a settled case without providing justifications.

knowledgeseeker365

SK911 said:

Hi KnowledgeSeeker365,

I’m a qualified insurance loss assessor specialising in domestic buildings insurance claims. Based on your situation, I would strongly advise not to accept a full and final settlement unless you’re absolutely certain all reinstatement costs have been properly accounted for.

The reason we caution against it is because once you begin reinstating your property, you may uncover additional damage or necessary work that wasn’t included in the insurer’s settlement. At that point, you won’t be able to claim further funds, and the insurer may require you to submit a new claim — which would likely mean paying another excess and potentially affecting your policy terms.

That said, it’s not too late to withdraw your acceptance of the full and final settlement. I recommend writing to your insurer (email is fine) to formally retract your acceptance and request that the claim remains open until full reinstatement is complete and all damage has been assessed.

At this stage, your best course of action would be to:

1. Send a final letter of complaint to the insurer, clearly setting out what you believe is a fair and reasonable settlement amount.

2. If they still don’t respond appropriately, escalate the matter to the Financial Ombudsman Service via their online complaints process

You also have the option of appointing a reputable loss assessor to help manage the claim on your behalf. Look for firms whose logo features a maroon and gold house (ask for Walthamstow)— they’re known in the industry and should be able to assist with assessing the full extent of your loss and negotiating with the insurer.

Happy to answer any further questions if needed.

Wishing you the best of luck in resolving this.

Thanks very much for your advice – I appreciate the advice given.

The full and final settlement was agreed on the understanding that there may be further damage beneath the floor, and that any newly discovered issues could be submitted as a separate claim. The builders who provided the quotes based their assessments on visible damage at the time, which included a clearly sinking kitchen floor and what appeared to be deterioration in the subfloor structure.

I do intend to escalate the matter, either to the Financial Ombudsman Service or through the courts, though I’m now leaning towards the Ombudsman route based on helpful guidance from others here. That said, I’m aware there’s a statutory waiting period before I can proceed, and I must either wait for that period to elapse or receive a final response from the insurer – which, as of now, remains outstanding.

As for a loss assessor, I had actually asked the insurer to appoint one to assess the damage in person, but they declined and instead requested that I submit photos – which I did. A settlement was then agreed, but the payment has still not been made.

knowledgeseeker365

DullGreyGuy said:

knowledgeseeker365 said:

Background (home-insurance claim)

• Escape-of-water claim covering a new kitchen and bathroom.

• Insurer accepted liability; I supplied quotes and they offered a “full and final” cash settlement, which I accepted.

• Despite repeated assurances (“payment in 3–5 working days”), no money has ever arrived.

• Instead, the claims team later tried to “re-open” the claim, demanding extra photos/videos. I refused, citing breach of contract and the original settlement agreement.

• All further emails and calls from me were ignored causing unnecessary delays throughout.

What I’ve done so far

1. Subject Access Request (SAR) – asked for all notes and call recordings.

• They missed the statutory deadline, then when threatened to be taken to ICO, they produced everything except the key call in which the settlement was agreed.

• I gave extra time; still no recording.

Formal complaint – raised under:

• Section 13A Insurance Act 2015 (payment within a reasonable time).

• FCA Handbook PRIN 2.1.1 R & DISP (handle claims promptly and fairly).

• Insurer’s own complaint procedures.

• Insurer Acknowledged, with a promise of a reply in 10 working days but missed this voluntary deadline.

Letter before action – sent after three months of insurer ignoring all communications.

• Same day, the complaints manager asked for “more time”.

• Next day I received calls from un-recorded mobile numbers, again requesting photos/videos. I declined asking them to liaise with complaints manager, further quoting their conduct equates to  tactical opening of the case.

• I informed them that I have kept the voicemails as evidence which may be produced as a part of complaint to court or an ombudsman.

Current position

• Claim unresolved >3 months.

• Complaint unresolved; the insurer’s eight-week FCA deadline expires very soon.

• SAR incomplete - The data controller released all records apart from the crucial settlement call recording, though it seems dodgy I cannot prove it is malicious so I contacted them again to address my concern and release the call as part of SAR.

• I’m preparing to report the SAR breach to the Information Commissioner’s Office (ICO).

---

My question

Should I:

1. Issue court proceedings now for breach of contract / late payment under s13A (plus interest and costs); or

2. Wait until the eight-week complaint window closes, then refer the matter to the Financial Ombudsman Service (FOS)?

Any pros/cons—or alternative routes—would be hugely appreciated. Thanks in advance for your guidance!

The FOS is required to find a fair outcome, the courts apply the letter of the law. 

Which term of your insurance policy do you believe they have breached? Normally insurance policies are written very much that the insurer is in control of the claim and I've never seen one that states it will be settled in X days as that would be a foolish thing to do. 

Your settlement agreement isnt a contract as you are not providing any consideration and it's not been executed as a deed, which doesnt need consideration, as you say it was verbal whereas a deed requires witnessed signatures. 

The FOS accepts that insurers are run by humans and that humans can make a mistake so won't make an insurer do something just because a call centre agent said they would. It will however consider the consequences that the broken word/promise has caused, eg if you'd gone out and bought a replacement on credit card expecting the cash would be coming shortly to pay it off then the ombudsman may consider if the insurer should repay the credit card interest which is a direct result of their broken promise. 

Thanks for your reply, I appreciate the points you’ve raised.

To answer your question directly: the breach I’m relying on is not a specific clause in the policy stating “payment in X days” (as you rightly note, few policies would state that), but rather a breach of the implied term under Section 13A of the Insurance Act 2015, which requires insurers to pay valid claims “within a reasonable time.” That statutory duty applies regardless of whether the insurer has issued specific timeframes, and breach of it is actionable.

The Financial Ombudsman Service (FOS) may look at fairness, but the legal framework still matters, and FOS decisions often do incorporate statutory rights — particularly when there’s a clear failure to meet regulatory duties such as ICOBS 8.1.1R (prompt and fair claims handling). The insurer in my case has not only delayed payment for over three months but also missed their own stated complaints deadlines and ignored a formal Subject Access Request (SAR), which further speaks to a systemic failure, not just a “human mistake.”

On the question of the settlement agreement: I’d respectfully disagree that no contract exists. Consideration was provided in the form of my agreement to accept a lower cash payment (instead of full reinstatement). That mutual agreement was made over a recorded call, which I have requested via SAR — and notably, this is the only call the insurer has failed to produce.

So, even if one disputes the enforceability of the verbal settlement as a deed, there is still a binding contract under common law principles of offer, acceptance, and consideration. It is also worth noting that verbal contracts are legally valid in the UK, particularly when followed by actions consistent with reliance (e.g., sharing bank details, halting reinstatement, etc.).

In this case, it wasn’t just a vague assurance from claims handler, it was a clear, agreed cash settlement figure, with terms (payment timeline, finality) discussed and bank details taken immediately after. That goes beyond “a broken promise” and into actionable territory, especially when paired with delay, procedural failures, and withheld evidence.

Thanks again for your advice this does help me look at this from another perspective.

DullGreyGuy

knowledgeseeker365 said:
The Financial Ombudsman Service (FOS) may look at fairness, but the legal framework still matters, and FOS decisions often do incorporate statutory rights — particularly when there’s a clear failure to meet regulatory duties such as ICOBS 8.1.1R (prompt and fair claims handling). The insurer in my case has not only delayed payment for over three months but also missed their own stated complaints deadlines and ignored a formal Subject Access Request (SAR), which further speaks to a systemic failure, not just a “human mistake.”

Yes, they consider the legislation but they arent bound to blindly follow it, they highlight this fact frequently in S75 disputes. Though this often means upholding a complaint that a court may have been unlikely to do rather than going against the insured. It can also be they accept some more creative solutions than again what's strictly required by law.  

Ultimately the recommendation that you proceed via the Ombudsman stands as they are more consumer leaning than the courts. 

It may be worth pointing out that a company can give information to the Ombudsman "in confidence" which means the ombudsman will consider it when deciding the outcome but it can't and won't be shared with the complainer. There are cases where someone has complained about timescales, the company has justified itself to the ombudsman and the complaint hasn't been upheld, you are left to draw your own conclusions on what may have been going on in the background that you wouldnt want to be tipping off the policyholder about.