Financial & Legal Insurance Company Ltd · DRN-6261005

The complaint Mr S complains that Financial & Legal Insurance Company Ltd (“F&L”) unfairly declined a claim under his gadget insurance policy. Where I refer to F&L, this includes the actions of its agents and claims handlers for which it takes responsibility. What happened The detailed background to this complaint is well known to both parties, so I’ll only summarise the key events here. • In June 2025, Mr S lost his phone in a supermarket. So, he made a claim under his gadget insurance policy. • F&L said Mr S had left the phone unattended, so his claim was excluded under the policy terms and conditions. • Mr S provided further clarification on the circumstances of his claim, but F&L said this was inconsistent with his previous testimony of what had happened. It maintained its decision to decline the claim. • F&L also said Mr S hadn’t complied with the policy terms by failing to report the incident to the police and blacklisting the device. • Mr S raised a complaint, which he brought to our Service. But our Investigator was satisfied F&L had handled the claim in accordance with the policy terms and hadn’t treated Mr S unfairly. As Mr S didn’t agree with our Investigator, the complaint was passed to me to decide. And issued the following provisional decision. My provisional decision I’ve reached a different outcome to our Investigator. Before I explain why, I wish to acknowledge the parties’ submissions in respect of this complaint. Whilst I’ve read them all, I won’t comment in detail on every single point that has been made. Instead, I’ll focus on the key points that are relevant to the outcome I’ve reached. That’s in line with our remit, which is to resolve complaints promptly and with minimal formality. The Financial Conduct Authority’s (FCA) Insurance Conduct of Business Sourcebook (ICOBS) requires businesses to handle claims promptly and fairly, provide information on the claim’s progress, and to not unreasonably reject a claim. I’ve kept this in mind when considering Mr S’ complaint.

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When making a claim under an insurance policy, the onus is on the policyholder to prove they have a valid claim. If they do, the insurer should cover the claim unless it can prove that a policy condition or exclusion applies. Mr S made a claim because he lost his phone – which is something the policy provides cover for. He said: “I went to [a] supermarket for shopping. After shopping used their washroom. My phone was in my pocket. After came out from washroom. I didn’t find my phone. I looked out there again but didn’t find. Most probably I left it in the washroom and someone took it.” The gadget insurance policy provides cover for accidental damage, loss, or theft. It provides the following definitions: “Accidental loss means the gadget has been accidentally left by you in a location and you are permanently deprived of its use. It does not cover loss of your gadget where it has been left unattended or it has not been appropriately concealed on or about your person.” “Unattended – not within your pocket, sight and your arms-length reach.” F&L seek to decline the claim because it says Mr S left the phone unattended. But I’m not persuaded that’s the case. I’ll explain why. Mr S is clear that the phone was in his pocket when he used the washroom. And it wasn’t there when he came out. At no point has Mr S said he removed his phone from his pocket and placed it somewhere outside of his pocket, sight, or arms-length reach. Mr S later clarified that the phone must have dropped out of his pocket, which F&L say is inconsistent from his original testimony. But it’s not. It’s a plausible explanation as to why his phone was no longer in his pocket. I haven’t seen anything to persuaded me that Mr S removed his phone from his pocket and left it unattended whilst he was in the washroom or using the facilities. Rather, on the balance of probabilities of what’s more likely to have happened, it seems to me that it fell out of Mr S’ pocket and he didn’t notice, so it was accidentally left behind – which the policy says it will cover. When Mr S went back into the washroom to check, the phone was gone so he’s permanently deprived of its use. F&L say Mr S didn’t comply with the policy term which says the accidental loss must be reported to the police within 24 hours of discovery of the incident. Mr S says he thought he only needed to do this if the phone was stolen, and I think that’s an understandable mistake to make as the police are unlikely to be able to assist with a lost phone. Mr S had reported his loss on Report My Loss – which is an online lost property report accredited by UK police – within 24 hours. And he logged the incident with the police after he was informed by F&L to do so. I can’t see there’s been any prejudice to F&L for the delay in notifying the police and the steps Mr S took instead were reasonable ones. F&L also say Mr S hadn’t blacklisted his phone within 24 hours of it going missing. Mr S has provided a letter confirming the phone was blacklisted from the date he made his claim on the policy. Whilst this wasn’t within 24 hours of the incident, I’m not persuaded this has had any material impact on the claim itself, so I don’t think it’s a fair reason to decline cover. F&L say when it checked later, the phone still wasn’t blacklisted. But this doesn’t appear to be a failing on Mr S’ part.

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Overall, I’m satisfied Mr S has shown he has a valid claim under the policy. And I’m not persuaded F&L has proven a policy condition or exclusion fairly applies. So, it follows that I’m not persuaded F&L has declined Mr S’ claim fairly. Based on what I’ve seen, I’ve no doubt Mr S has suffered distress and inconvenience as a result of F&L’s unfair decision to decline his claim. It’s clear F&L hasn’t listened to Mr S’ explanation of what happened. Rather than trying to find out more information about the location of the phone during the visit to the washroom, F&L has relied heavily on an incomplete testimony on its claim form and has refused to accept any further clarification from Mr S. I don’t think F&L has taken into account that English may not be Mr S’ first language and it hasn’t done anything to attempt to understand the circumstances in full. For this, I intend to award compensation. Responses to my provisional decision F&L didn’t accept my provisional decision. In summary, it said: • Mr S provided further information about the circumstances of the loss on a call with its fraud prevention team. On that call, Mr S confirmed he was using the phone whilst in the washroom. • Mr S’ policy terms are clear that he needs to notify the police in respect of a lost phone and this was also made clear on the online claim form. • As Mr S didn’t contact the police within the required 24 hours, F&L don’t know what action the police may or could’ve taken. The first 24 hours of a loss has the greatest opportunity for the return or retrieval of any items so the failure to report the incident to the police has hindered the claim. Mr S accepted my provisional 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. Having considered the further information provided, I remain of the opinion that Mr S’ claim wasn’t fairly declined. I’ll explain why. I now have a more detailed picture of the circumstances leading to Mr S losing his phone. From what I know, he entered the supermarket washroom with his phone in his pocket. He used the phone whilst in the washroom, and when he left, he realised he no longer had his phone with him. He returned to the washroom to find it, but it was already gone. It’s not clear whether Mr S left the phone in the washroom by accident. Or whether he returned it to his pocket after using it, and it fell out. Either way, he didn’t have his phone when he left. The policy covers the loss of a phone if it’s “accidentally left by you in a location”. And that appears to be what Mr S did – he left it accidentally in the supermarket washroom either after using it or when it fell from his pocket. There is no allegation that Mr S intentionally left his phone in the washroom.

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F&L seek to rely on the policy exclusion that Mr S’ phone was unattended, defined by the policy as “not within your pocket, sight and your arms-length reach”. Ultimately, if a phone is accidently left in a location, then by default, it isn’t going to be in the owner’s pocket, sight, or arms-length reach. This means there would never be cover under the policy for accidently leaving a phone somewhere, as it would always be caught by the unattended exclusion. The effect of this means the policy gives cover with one hand and then takes it away with the other – which wouldn’t be fair. I’m satisfied Mr S didn’t intentionally leave his phone unattended. He didn’t make a conscious decision to leave it in the washroom to come back for it later. Rather, he accidentally left it in the washroom – which is an insured event for which he is covered. So I remain satisfied that the claim is covered. It’s not in dispute that Mr S’ policy requires him to notify the police of his loss within 24 hours. And he didn’t do so. But to rely on this policy condition to decline the claim, I need to be satisfied that F&L suffered a prejudice as a result of the breach of the policy condition. F&L say that as Mr S didn’t report the loss, it doesn’t know what the police may or could’ve done. But this isn’t sufficient to show prejudice and that, on the balance of probabilities, the police were prevented from doing something which would’ve aided the recovery of Mr S’ phone. F&L receive a large number of claims on mobile phone and gadget policies; I’ve no doubt it has sufficient experience to tell me what the police would likely do in these circumstances based on what it’s seen on other cases. But it hasn’t provided any such information. Based on my experience, I’m not persuaded the police would’ve attended the supermarket in the crucial period of the first 24 hours of the loss in order to investigate and attempt to recover a phone left accidentally in the washroom which was, by that time, gone. It’s more likely the police would simply have logged a report and provided Mr S with an incident number. So it follows that I’m not persuaded Mr S’ actions hindered the claim and caused F&L prejudice. My final decision For the reasons I’ve explained, I uphold this complaint and direct Financial & Legal Insurance Company Ltd to: • pay the claim in line with the remaining policy terms and conditions. • pay compensation of £150. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr S to accept or reject my decision before 27 April 2026. Sheryl Sibley Ombudsman

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