ARAG Legal Expenses Insurance Company Limited · DRN-6073427

The complaint L’s complaint is about a claim it made on its ARAG Legal Expenses Insurance Company Limited (‘ARAG’) commercial legal expenses insurance policy, which was declined. L says that ARAG treated it unfairly. L’s complaint is brought by Mr L, but I shall refer to all submissions as being L’s own for ease of reference. What happened The details of this complaint are well known to both parties, so I won’t repeat them here. Instead, I’ll focus on providing my reasons for my 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 done so, I don’t uphold L’s complaint for the same reasons set out by the investigator. Before I explain why I wish to acknowledge the volume of submissions made by L in support of its complaint. Whilst I’ve read everything it has said, I won’t be addressing it all. That’s not intended to be disrespectful. Rather it’s representative of the informal nature of the Financial Ombudsman Service. Instead, I’ll concentrate on the crux of L’s complaint, namely whether ARAG treated it unfairly when declining its claim. The starting point is the policy terms. They say: “This section will cover you (or where specified the insured person) in respect of any insured incident arising in connection with the business shown in the policy schedule if the premium has been paid. DAS agree to provide the insurance in this section in accordance with the operative covers shown in the policy schedule as long as: 3. any legal proceedings will be dealt with by a court, or other body which DAS agree to, within the territorial limit; and 4. the insured incident happens within the territorial limit.” “Territorial limit” is defined elsewhere in the policy as “… For all other insured incidents: The United Kingdom of Great Britain and Northern Ireland, the Isle of Man and the Channel Islands”. In this case L wanted to bring a claim against a third party. The terms of the agreement between L and the third party were governed by the law of Germany exclusively. For this reason, ARAG declined to cover L’s claim as the policy didn’t extend to claims that were outside of the territorial limits I’ve referred to above. Looking at the policy terms and the terms of the contract between the third party and L, I’m satisfied that ARAG were entitled to decline L’s claim in the way that they did as there was simply no cover to bring claims outside of those territorial limits.

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When reaching my conclusions, I’ve taken account of the fact that L considers ARAG could have equally decided to cover its claim. It refers to a policy schedule it was supplied with for the policy year starting 2024, which states: “Territorial limit … For all other insured incidents United Kingdom of Great Britain and Northern Ireland, Isle of Man, Channel Islands and any other extension agreed with (ARAG)”. L considers the reference I’ve noted in bold above means ARAG can widen the scope of the policy. Whilst that might be right, I don’t think it was obliged to. It’s also possible that the reference in bold could be to further cover being purchased from ARAG in advance that might entitle a policyholder to make claims in a wider jurisdiction, which is why it refers to any other extension. But even if I’m wrong, the words refer to something ARAG need to agree to. In this case ARAG haven’t agreed to extending the territorial limit and there’s nothing in the policy terms themselves nor the schedule that requires them to. Our role is not to oblige businesses to extend cover beyond their policy terms. Rather it is to interpret whether a business has treated a policyholder fairly. For the reasons set out, I think that ARAG did treat L fairly as they weren’t obliged to cover claims beyond the scope of the policy’s territorial limits. That extends to progressing those complaints in any shape or form, like for example, considering the merits of L’s claim. If L remains unhappy about how the policy was presented to it when it was sold, then that is something it will need to address with the seller of the policy directly. I turn now to ARAG’s handling of L’s claim. I appreciate L is unhappy with this but there is nothing in the way in which ARAG dealt with the claim, either in the time it took, the nature of the communications L had with it, or the fact that it dealt with L’s concerns as a complaint, that makes me think they did something wrong. Overall, ARAG explained why the claim wasn’t covered and, in my view, that is sufficient explanation given the terms of the policy. My final decision For the reasons set out above, I don’t uphold L’s complaint against ARAG Legal Expenses Insurance Company Limited. Under the rules of the Financial Ombudsman Service, I’m required to ask L to accept or reject my decision before 28 April 2026. Lale Hussein-Venn Ombudsman

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