Great Lakes Insurance UK Limited · DRN-6138271

The complaint Mr and Mrs M have complained that Great Lakes Insurance UK Limited has only partially settled a claim they made on a travel insurance policy. What happened Mr and Mrs M had booked a holiday cottage for a week in August 2025 and had invited other guests to share it with them. Over the course of the week, there would have been a total of seven people staying, including two children. Unfortunately, Mr M became unwell and so they had to cancel the trip. They therefore made a claim on the policy for £1,540, that being the non-refundable cost of the accommodation. Great Lakes accepted the claim. However, as it was only Mr and Mrs M who were covered on the policy, it made a proportionate settlement and initially paid £480. After the complaint came to this service, it subsequently offered an additional £85.70, having recalculated the claim amount based on the planned occupancy of the cottage over the course of the week. Our investigator thought that Great Lakes had acted reasonably in its settlement of the claim, in line with the policy terms and conditions. Mr and Mrs disagree and so the complaint has been passed to me for a 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. I’ve carefully considered the obligations placed on Great Lakes by the Financial Conduct Authority (FCA). Its ‘Insurance: Conduct of Business Sourcebook’ (ICOBS) includes the requirement for Great Lakes to handle claims promptly and fairly, and to not unreasonably decline a claim. Insurance policies aren’t designed to cover every eventuality or situation. An insurer will decide what risks it’s willing to cover and set these out in the terms and conditions of the policy document. The test then is whether the claim falls under one of the agreed areas of cover within the policy. So, I’ve considered the terms of the policy Mr and Mrs M held, as this forms the basis of contract between the parties. Under the cancellation section of the policy, it states: ‘What is not covered? 5. any claim for travel or accommodation expenses of any person not insured under this policy, regardless of whether you have paid those costs on their behalf.’

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Great Lakes has essentially offered to pay Mr and Mrs M an amount equivalent to what their share of the costs would have been had each individual been paying their own way for the nights they were staying (and the costs for the two children being paid for by their parents). Mr and Mrs M paid for the cottage themselves and were gifting it to the other guests. As they were financially responsible for the whole amount, they feel that the settlement figure should reflect their actual loss. They’ve mentioned that two of the other adults were insured separately but have been unable to claim on their own policy due to not being able to evidence proof of payment. It makes sense that they haven’t been able to claim, as they haven’t suffered a financial loss. Had they been contributing to the trip, I might have expected their insurer to look at it differently. That of course leaves a situation where the full cost of the accommodation isn’t recoverable anywhere, which feels wrong to Mr and Mrs M. It isn’t in dispute that they were solely responsible for the cost of renting the cottage and so have borne the entire financial loss themselves. However, the matter at hand is whether that is covered under the policy terms – and I’m afraid to say that it is not. I am very sympathetic to their situation. Obviously, they couldn’t have anticipated that Mr M’s health would prevent them from travelling. They were generously paying for the accommodation, for the enjoyment of the wider group, and are out of pocket as a result. However, I’m unable to conclude that Great Lakes has done anything significantly wrong. It was reasonable that it settled the claim proportionately for the two policyholders, in line with the policy terms and conditions. My final decision For the reasons set out above, I’m satisfied that the settlement offer was fair and reasonable. However, Great Lakes Insurance UK Limited should pay Mr and Mrs M the additional £85.70 now if it hasn’t already done so. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr M and Mrs M to accept or reject my decision before 20 April 2026. Carole Clark Ombudsman

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