Great Lakes Insurance SE · DRN-6210910

The complaint Mrs R and Mr S complain Great Lakes Insurance SE unfairly declined their landlord insurance claim. They are both complainants, but as Mr S has been the main correspondent I’ve generally only referred to him. Great Lakes has been represented by agents for the claim and complaint. For simplicity I’ve referred to the agents’ actions as being Great Lakes’ own. What happened Mr S is a residential landlord. In November 2024, after being granted a possession order by a court, he discovered his property had been used for the cultivation of cannabis. He claimed against his Great Lakes landlord insurance policy for damage arising from that activity, plus three months unpaid rent. Great Lakes considered the claim against the policy’s cover for damage arising from a tenant’s use of the premises for the cultivation of drugs. The claim was declined for a failure to meet the cover’s property inspection requirement - requiring internal and external inspections at least every three months. Mr S raised various objections to Great Lakes, but it didn’t change its position. Unhappy with the claim decline, he referred a complaint to the Financial Ombudsman Service. He considers Great Lakes has misinterpreted the policy term. He believes inspections are required only every six, rather than every three, months. He also feels it’s failed to consider his history of regular inspections and the reasons he’s given for others not occurring. In his opinion Great Lakes incorrectly and unreasonably declined his claim, leaving him with significant financial loss. Our Investigator found, as there hadn’t been an inspection every three months as required, and in the absence of reasonable attempts by Mr S to arrange one after March 2024, it was fair for Great Lakes to decline the claim. As Mr S didn’t accept that outcome the complaint was passed to me to decide. He said he had made genuine and repeated efforts to meet the inspection requirements, but factors preventing a successful inspection in the period before he regained possession were beyond his control. So he considers it unfair and disproportionate for Great Lakes to rely on the inspection term to decline the claim. I issued a provisional decision. In it I explained why I didn’t intend to uphold Mr S’s complaint. The reasons I gave form part of this final decision, so are copied in below. I also invited him and Great Lakes to provide any further comments or evidence they would like me to consider before issuing this final decision. what I’ve provisionally 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.

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As this is an informal service I’m not going to respond here to every point or piece of evidence Mr S and Great Lakes have provided. Instead, I’ve focused on those I consider to be key or central to the issue. But I would like to reassure both that I have considered everything submitted. Having done so, I don’t intend to uphold the complaint. Mr S’s policy requires Great Lakes to pay for damage arising from his tenant’s use of the insured property for the manufacture, cultivation etc or illegal drugs. However, the cover has the following requirement: ‘…provided that you or anyone acting on your behalf: a) Carries out internal and external inspections of the Buildings at least every three months or as permitted under the tenancy agreement. You must 1. maintain a log of such inspections and retain that log for at least 24 months, and 2. carry out a six-monthly management check of the inspection log…’ The term includes other requirements, including vetting of tenants, but I haven’t set them all out as Great Lakes hasn’t argued they were breached. I’ve only been provided with limited evidence, including photos and a repair estimate, of the condition of the property when Mr S regained possession. It does seem, from the photos of insulated rooms and horticultural items, there was damage typical of that arising from use of a property for cultivation of cannabis. However, Great Lakes is of the opinion the property wasn’t inspected in line with the above requirement. So, I’ve first considered if, as Great Lakes feels, there was a breach of that requirement. Mr S feels inspections are only required every six months, not every three as Great Lakes has argued. In support he’s referred to six months being the widely accepted landlord inspection arrangement, as well as that which is frequency agreed with the tenant. However, it’s the policy terms under consideration here. These state internal and external inspections must be carried out every three months – or as permitted under the tenancy agreement. It also requires a log of the inspections to be maintained. Great Lakes, having reviewed the tenancy terms for the property, is of the opinion Mr S is allowed to inspect the premises at all reasonable times, subject to 24 hours’ notice. So, it feels there’s nothing in its wording preventing internal and external inspections every three months. I haven’t seen anything to support Mr S’s position that he was legally, or otherwise, only able to inspect every six months. I’m satisfied having reviewed the relevant part of the tenancy that Great Lakes makes a reasonable assessment of the matter. With this in mind I find its position, that the policy term requires an inspection, internally and externally, at least every three months, is reasonable. Great Lakes has said inspections only took place every six months up until December 2023, with none in 2024. Therefore, it considers the requirement to have been breached. Initially Mr S told Great Lakes he made ‘casual’ inspections every three months, with documented inspections taking place every six months. Inspection reports he’s provided, show internal and external inspections occurring in January 2023, May 2023 and December 2023. Each record has a completed box titled ‘Expected date to reinspect’. The dates entered are, respectively, early May 2023, early December 2023 and mid-June 2024. The first two were broadly met, with the June 2024 inspection not taking place. The December 2023 inspection was the last one before repossession occurred almost a year later. However, the actual and estimated dates don’t support inspections being planned

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for, or taking place, every three months - instead the periods are four months, seven months and six months. Later, after Great Lakes raised the inspection requirement as an issue, Mr S said he has records supporting his ‘casual quarterly inspections’. I’ve been provided with a ‘home visit’ record dated March 2024 but nothing more. I will consider anything else Mr S provides in response to this provisional decision. However, I’m currently not persuaded casual inspections did take place, internally and externally, every three months. There’s little to support their occurrence, with inconsistent accounts given as I’ve set out below. Mr S has said there was an inspection due in March 2024, but this couldn’t take place as the tenant was unavailable and so on. There’s a home visit record with that date. It simply says, ‘no access’ and ‘no response’. However, Mr S had previously told Great Lakes the next inspection, following December 2023’s, was due in May 2024. He said he had tried to arrange it, but the tenant was away. In addition, the December 2023 inspection report gave June 2024 as the next expected inspection date. So, there’s some inconsistency here. Overall, I’m not currently persuaded internal and external inspections took place at least every three months in the period accounted for - from January 2023 to mid-2024 when Mr S became concerned about his tenant’s conduct. Neither have I seen evidence of relevant logs of three-monthly inspections being maintained. So, I find Great Lakes position that there was a breach of the inspection requirement to be reasonable. However, that doesn’t automatically mean its decision to decline the claim is fair and reasonable. I also need to consider – • if the breach made a difference, • if in all the circumstances its fair and reasonable for Great Lakes to rely on it to decline the claim • and finally - if the inspection requirement should have been, and was, highlighted to Mr S. Great Lakes has explained the regular inspections are required by the policy to deter individuals from setting up cannabis cultivation operations. It argues the tenant took advantage of the breach to set up such an operation. It’s not possible to know for certain what would have happened had Mr S, from the beginning, inspected the property every three months as required, rather than every five, six or seven months. However, it seems probable the tenants would have been less likely to have set up such an operation if the expected gap between inspections had been three, rather six or seven months. For that reason, I find Great Lakes position – that the breaches were material to the loss, with the tenant taking advantage of the known extended gap between inspections to set up the operation – to be reasonable. I also consider it fair and reasonable for Great Lakes to rely on the breach to decline the claim. As the insurer has explained the intention of the shorter time between inspections is to deter set up of these cultivation operations. I’m satisfied, for the reasons given, this requirement was breached from the start of the tenancy. I appreciate Mr S tried to inspect the property in 2024 but received various excuses from the tenant. That seems likely to have happened as the cannabis operation was already in place. I also accept Mr S took actions to gain entry legally. However, by these points there had already been repeat failures to inspect every three months. As Great Lakes has said the tenant took advantage of the situation to set up the operation. So, Mr S’s action after the December 2024, whilst no doubt taken in good faith, were too late to mitigate the effects of

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his breach of the policy term. The breaches that influenced the setup of the operation had already occurred. Finally, I’ve considered if Mr S was reasonably made aware of the inspection requirement. The requirement does go beyond what might be more commonly expected of landlords. But it’s also worth noting that it offers extended cover to that usually available from this type of policy – so the additional requirements reflect additional cover being offered. In any event, the requirement is something Mr S would need to be made aware of. And I’m satisfied he was provided with information to make him aware. A policy summary document provided to him outlined the inspection and record requirements under the heading of ‘Summary of significant or unusual exclusions and limitations’. I’m satisfied this was enough to draw it to his attention. I accept this will be frustrating for Mr S, but I don’t currently intend to require Great Lakes to do anything differently. I will of course consider any further evidence or comments provided before issuing my final 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. Great Lakes didn’t provide any new evidence in response to my provisional decision. Mr S submitted several documents along with a detailed response. Having considered his latest submission, I still consider it fair and reasonable for Great Lakes to rely on the inspection requirement breach to decline the claim. Mr S provided further ‘home visit’ records - dated March 2023, August 2023 and September 2023 - recording internal and external inspections. However, I’m not persuaded these support inspections having taken place in line with the policy requirement. Again, there are inconsistencies. The ‘home visit’ report dates don’t align with the full property inspection reports estimated next inspection dates. Further it’s not clear why Mr S didn’t provide these reports at a much earlier date, nor why he didn’t explain from the outset that three monthly inspections had taken place. In addition, he has previously told this service that he was only required to inspect every six months - and that he only inspected every six months. I’m still of the opinion its fair for Great Lakes to conclude the three-monthly inspection requirements was breached. In his latest comments Mr S has denied any breach was material to the loss. He has said an inspection earlier than December 2023 wouldn’t have prevented the property being used for cannabis cultivation later. Mr S has also referred to the practical realities of inspecting a property every three months - being dependent on tenant’s good will and legalities etc. However, I still find Great Lakes’ position - that the breaches were material to the loss, with the tenant taking advantage of the known extended gap between inspections to set up the operation - to be reasonable. It can never be known for certain what may have happened differently. But it’s reasonable to say that had Mr S maintained a strict three-monthly inspection regime from the outset of, the risk of the tenant using the property for cannabis cultivation would have been lower. I appreciate this will be frustrating for Mr S but having considered his latest evidence and comments, I’m not upholding his complaint.

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My final decision For the reasons given above, I don’t uphold Mrs R and Mr S’s complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mrs R and Mr S to accept or reject my decision before 14 April 2026. Daniel Martin Ombudsman

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