MSE News: Don't underinsure your household belongings, Ombudsman warns

Former_MSE_Paloma · 21 October 2014 at 3:17PM

If you're taking out contents insurance, ensure you don't underestimate the value of your goods, the Ombudsman warns

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Don't underinsure your household belongings, Ombudsman warns

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InsideInsurance · 21 October 2014 at 3:33PM

Not sure if the original or MSE paraphrasing is of the lower journalistic merit. Original is http://www.financial-ombudsman.org.uk/publications/ombudsman-news/121/121-under-insurance.html

It is probably worth adding to the MSE version that in the case study that they quote the ombudsman did say to consider the claim for £100,000 of jewelry but the £10,000 limit the complainant had asked for did still stand - they didnt actually get £100,000 cover for the price of £10,000

The issues with these types of articles is that there is too much focus on the "heres how to get out of it" rather than what the primary focus probably should be of "dont get into the mess in the first place" with a small sub text of "all is not necessarily lost if you messed up"

Before Quentin inevitably steps in, obviously if the insurer does ask poor/ unclear questions etc then the FOS absolutely should be there and should rule against the insurer however the slant of the articles should be stronger in getting it right to start off with.

Pincher · 21 October 2014 at 9:32PM

Tried to claim for a lost camera recently stolen on holiday.
Did everything right, including running around finding a police station to get a crime report. I even have the original box and receipt. So, they take off 75% for AGE, and then £50 excess, which made a £160 10Megapixel camera worth £40, and less than the £50 excess. Theoretically, I should PAY THEM £10 to cover the excess!

They are very happy to insist you need to buy £1,000 of cover for a TV, and then only pay out £250 by saying it's old.

I bought myself a 12MegaPixel camera for £180, so it's about the same after inflation. The real loss is the holiday snaps of course.

One of these days, Islamic State will kidnap me in Sharm El Sheik, and the travel insurance will just say they refuse to negotiate with terrorists. I have already been through the accident where I got my own police report after being ambulanced to an A&E, and the "24 Hour Emergency Helpline" tells me they have no one who can speak French! Neither can I!?

What kind of "Help" do they mean?
"Don't use too much blood for transfusion, and keep the cotton buds under quota."

InsideInsurance · 21 October 2014 at 9:42PM

Pincher wrote: »

Tried to claim for a lost camera recently stolen on holiday.

Travel and gadget insurance is normally indemnity based whereas Home insurance is normally new for old. Which insurance did you claim on? I am guessing Travel?

Secondly, insurance is intended for the unpredictable things in life. You exchange the risk of a big loss for the known of a small loss (aka the premium). It is fairly inevitable that occasionally we will lose the occasional gadget, break the occasional glass, get a coffee spot stain on a sofa etc, as a basically predictable inevitability event insurance will never be cost effective.

On the flipside, the £30 premium that pays out a £1m settlement for your major head injury you suffer on holiday or the £200 premium that pays out £300k when your house burns down all look very good value for money.

Pincher · 22 October 2014 at 10:25AM

I have been dealing with insurance company's excuses most of my life. Starting from two stolen bicycles at university to a subsidence that got dragged out over ten years, with seven years worth of uneffective patching up, until the cracks were going through the middle of tiles.

The foreman from the firm that does a lot of insurance jobs, told me how the cash offer is always derisory, and you can never get the job done for the money they offer you. Even the money his firm gets is only enough if they hire East Europeans through gang masters. In my case, Romanians who speak no English did all the heavy work. They can't afford to hire English workers who need a living wage.

We are now paying £1,500 a year for building and contents, because of the subsidence history. Obviously we cannot go elsewhere for cover. Don't tell me I am getting good value for money, the premium for the last 20 years altogether is near what the insurance company actually paid out already. If we had simply got our own structural engineer and builders, we would have sorted the situation out in a couple of years, instead of the ten years of purgatory they dragged us through.

Don't get me started on the private health insurance. My mother had an accident and needed an operation on her knee. NOT COVERED because it's an emergency, please sod off and go to the NHS, which operated after two days. She was paying £2,300 a year to BUPA! I wish they can sue BUPA and get the money back for the NHS for the operation.

InsideInsurance · 22 October 2014 at 10:39AM

Pincher wrote: »

The foreman from the firm that does a lot of insurance jobs, told me how the cash offer is always derisory, and you can never get the job done for the money they offer you. Even the money his firm gets is only enough if they hire East Europeans through gang masters.

The FOS has previously ruled that an insurer can base a cash settlement offer on what their approved suppliers would charge for the job unless no one on the suppliers list can actually do the job/ replace the item. Given the volume of work that insurers can give out they do get substantial discounts.

The Foreman needs to speak to his bosses, insurers run simple tender processes to create their network of approved suppliers and so its the supplier that has set the cost they are willing to work at not the insurer. Whilst cost is a big consideration for the insurer its not the only one as things like national coverage or value added services for free all add significant points to their score to the RFP process (its easier to manage a network of 3-4 national companies than 500 local companies).

Now if some suppliers over stretch themselves either by cutting prices too low or claiming they've higher capacity for work than they really do then thats really their own fault and hopefully the supplier management process will identify the issues and they will ultimately be removed from the approved supplier list if they cannot bring themselves up to grade.

Go to any accident repair centre and say you need a quote for a dent being fixed, first question is if its private or insurance. The quote for insurance is always massively more. Yes the insurers will negotiate afterwards but rarely get it down to what they'd have billed you for it directly.

middle_aged_madness · 22 October 2014 at 9:01PM

Whilst the comparison sites are really useful if you don't understand insurance then they can be really misleading when you are doing your house and contents insurance. When I have done quotes they give an "estimate" or average of your contents value - these are usually way too low for most houses - but this means that their premium is cheaper and its the price not the cover that most people look for. All of the sites also don't ask about accidental damage cover until you get right to the end - and yes its expensive but an accident is the most likely cause of you claiming on your insurance.

weejonnie · 22 October 2014 at 10:10PM

Taking valuables abroad? get them added on your home insurance as an 'all-risks' item. The benefit is new for old and they are covered for a full year, (usually just 60 days out of the EU) not just the trip.

MSE News: Don't underinsure your household belongings, Ombudsman warns

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