Settlement is binding

A policyholder submitted a claim for water damage, which was initially reviewed and accepted by the insurer. Following the insurer’s approval, the parties reached an agreement regarding the scope of the loss and the amount to be paid under the policy.

However, after the claim had been approved and partial payments had already been issued, the insurer reversed its position. The insurer advised that it had incorrectly interpreted the policy coverage and asserted that the claim should not have been approved in the first place. As a result, the insurer refused to issue the remaining payments that had formed part of the agreed settlement, leaving the policyholder facing significant uncertainty and financial hardship.

Upon being retained, we reviewed the file, including the policy wording, the insurer’s communications, and the circumstances surrounding the original approval of the claim. We then engaged directly with the insurer and raised concerns regarding the fairness of withdrawing coverage after the claim had already been accepted and settlement terms agreed upon.

Following our intervention, the matter was escalated to the insurer’s senior leadership team for further review. After reassessing the file, the insurer acknowledged the circumstances surrounding its original approval and agreed to honor the claim on the terms that had initially been accepted. As a result, the outstanding payments were issued and the claim was settled in accordance with the original agreement, bringing the matter to a satisfactory resolution for the policyholder.