Zurich Insurance has been ordered to pay indemnity costs after a High Court judge found the insurer’s conduct in defending a homeowner’s claim was "extraordinary" and fell well outside acceptable practice in consumer litigation.
The case, Bellhouse & Anor v Zurich Insurance Plc, involved Charles and Biborka Bellhouse’s claim under a Zurich home insurance policy following serious water damage to their residential property in Wood Green, London. The property was undergoing major renovations at the time of the loss, including demolition, excavation, and structural works - a key feature in the insurer’s eventual refusal to indemnify.
The Bellhouses had purchased the Zurich “High Net Worth” insurance product through brokers in May 2021, covering their home and contents. On June 9, 2021, a water escape during works caused extensive flooding and damage, including to the basement area.
Zurich denied liability on two grounds: (1) the damage fell within the “contract works” exclusion clause of the policy, and (2) Mr Bellhouse had allegedly made a fraudulent misrepresentation by failing to disclose that building works were underway when the policy began.
The claimants argued they had fully disclosed the ongoing works to their insurance broker, including submitting architectural drawings and the building contract.
Zurich, however, claimed it had relied on a “Statement of Insurance” purportedly provided by Mr Bellhouse, which did not disclose the construction activity. Yet it failed to specify when and how it had received this document or how it was said to override the broker's disclosures.
In a detailed judgment dated 18 June 2025, HHJ Hodge KC found Zurich’s defence lacked essential clarity and had been improperly maintained for nearly two years. The judge criticised Zurich for failing to explain key elements of its case, particularly the nature of the alleged misrepresentation and its reliance on the contract works exclusion.
He also expressed concern that Zurich had repeatedly failed to engage properly with pre-action and procedural steps, including a Part 18 Request asking for details of the insurer’s reliance on the Statement of Insurance.
“There was never a clear explanation of how or when Zurich received the alleged Statement of Insurance, nor how it was relied upon,” the judge noted. The insurer had an opportunity to clarify these matters through pleadings or correspondence but refused.
While the court allowed Zurich one final opportunity to amend its defence, it awarded the Bellhouses full indemnity costs of over £87,000 for the procedural application, blaming Zurich’s conduct for nearly a year of delay and unnecessary legal expense. The judge stressed that the cost consequences were justified because the insurer’s behaviour had "necessitated a vast, and wholly unnecessary, expenditure of costs by private individuals."
Zurich’s attempt to recover its own costs was rejected, with the judge describing its litigation stance as “intransigent” and out of keeping with proper standards expected of an insurer in consumer-facing claims.
