Marshmallow Insurance Limited · DRN-6109314

The complaint Miss N is unhappy with how Marshmallow Insurance Limited (Marshmallow) dealt with her car insurance claim after she was involved in an accident. Any reference to Marshmallow includes its agents. What happened Miss N was involved in a non-fault accident in March 2025. Miss N’s car was damaged in the accident, so she made a claim on her insurance policy. Marshmallow appointed one of its approved repairers to carry out repairs. Miss N was unhappy with Marshmallow’s decision to repair the car. She said the repair estimate had reached around 90% of her car’s insured value and this was higher than the industry’s repair-to-value percentage threshold of 60%-70%. She thought Marshmallow should have declared it a total loss. She also said its repairer returned her car dirty and with new damage, dashboard warnings, degraded battery, low tyres, and faulty keys. In its response to the complaint, Marshmallow maintained its decision to repair the car. It said it had discretion over the method of the claim settlement. And that the repair-to-value ratio was guidance only, not a contractual or statutory limit. It said it didn’t think the issues Miss N had reported after its repairer had completed the repairs were related to the accident or the repairs. So, it said it wouldn’t do anything further. Unhappy with Marshmallow’s response, Miss N brought her complaint to our Service for a review. Following our Service’s involvement, Marshmallow acknowledged that Miss N’s car was returned with presentation issues and signs of poor care. To apologise for this, it offered Miss N £150 compensation which she rejected. One of our Investigators looked into this matter. She thought Marshmallow’s decision to repair the car was reasonable but she didn’t think it had investigated the issues Miss N had reported appropriately. She recommended that it arrange an independent inspection of the car to establish if the issues were accident or repair related. She also recommended it increase its compensation offer to £400 to reflect the distress and inconvenience caused to Miss N due to its failure to investigate her concerns with the quality of the repairs and the car being returned dirty. Marshmallow accepted the Investigator’s findings. Miss N didn’t. She said the recommended independent inspection wouldn’t address the fundamental issues she’d raised. She said Marshmallow should pay her a total loss settlement. As Miss N didn’t agree with the Investigator, the complaint’s been passed to me to decide. 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’m aware I’ve set out the background to this complaint in less detail than the parties have

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presented it. I’m not going to respond to every single point raised. Instead, I’ve focused on what I find are the key issues here. I assure both parties, however, that I’ve read and considered everything they’ve provided. Firstly, I think it’d be helpful to explain that our role is to resolve disputes between policyholders and insurers, to help both parties move on. It isn’t our role to handle a claim or to deal with matters as they arise. Miss N has said her car broke down in January 2026 and she had to pay for a replacement battery to make it operational again. As the Investigator has already explained, Marshmallow has to be given the opportunity to address issues first before we can consider them. So, in this decision, I will only be looking at issues up until Marshmallow issued its final response in August 2025 and won’t comment on what’s happened after this date. Repair decision The starting point is the insurance policy terms and conditions which form the contract of insurance between Marshmallow and Miss N. The terms of the policy, like all other car policies, give Marshmallow full discretion of how to settle the claim. And it sets out that Marshmallow could choose to either pay for the repairs or pay Miss N a cash settlement. So, Marshmallow was entitled to decide whether it wanted to repair the car or pay the car’s insured value. I’ve therefore considered whether Marshmallow has exercised that discretion fairly and reasonably in this case. It's important to explain that we don’t assess or decide repair costs for damage to a car, that’s for the experts to do. Our role is to consider if the insurer has fairly considered the available evidence and justified its decision about the repairs carried out. To do that, we look at all the available evidence, including anything provided by the policyholder, the insurer, and the repairer. Miss N feels strongly that Marshmallow should have written off her car. But I note she didn’t query its decision to repair the car until after the repairs were complete and the car was returned to her. Marshmallow sent Miss N its final repair invoice in July 2025 which showed the repair cost to be £8,302 against an insured car value of £8,930 and this is when Miss N first queried its repair decision. In any event, Marshmallow has explained its decision was based on its engineer’s opinion that a repair was appropriate because Miss N’s car had sustained an impact to the right- hand side, with no evidence of structural damage. Its engineer confirmed the damage was limited to cosmetic panel issues. And as the car had only covered around 63,990 miles and was in good condition, it felt a repair was reasonable. I don’t think it was unreasonable for Marshmallow to rely on its engineer’s expertise here. And, as I said, it was ultimately up to Marshmallow to decide whether it wanted to repair the car or write it off. So, I can’t say it acted unfairly in this aspect of Miss N’s complaint. Reported issues Miss N reported a number of issues with the car after Marshmallow’s repairer returned it to her in June 2025. She specifically reported damage on the back left door, low tyre pressures, dashboard warnings, degraded battery and faulty keys. Marshmallow refused to consider any further rectification work. It said its repairer thought the reported issues were unrelated to the accident or repairs. However, Marshmallow has confirmed no post-scan was performed on Miss N’s car and it doesn’t have a copy of the check-in sheet from its repairer. I also note its repairer simply dismissed Miss N’s reported issues and didn’t inspect the car any further. So, like the

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Investigator, I don’t find Marshmallow did enough to properly investigate Miss N’s concerns here. I’ll therefore be directing Marshmallow to arrange an independent assessment to determine whether the reported issues were related the accident or repairs. I know Miss N doesn’t think this would resolve her concerns. But I think this is a reasonable course of action to help establish a cause of the reported issues. I also think the £400 compensation recommended by the Investigator is fair, reasonable and proportionate to reflect Marshmallow’s service failings and the impact on Miss N. I know Miss N feels this amount isn’t enough for the distress and inconvenience she experienced. I don’t doubt the upset she felt when her car was returned to her in a dirty condition and the frustration she must have felt when the issues she reported were dismissed without a proper investigation. But having considered what has happened, I think this amount is consistent with our bands of awards where there has been considerable distress and upset over many weeks or months. My final decision My final decision is that I uphold this complaint. I require Marshmallow Insurance Limited to do the following: • arrange an independent assessment, to determine whether the reported issues are associated with the accident or repairs • pay Miss N £400 in compensation for the distress Under the rules of the Financial Ombudsman Service, I’m required to ask Miss N to accept or reject my decision before 20 April 2026. Linda Tare Ombudsman

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