Third party fire and theft insurance and Arson

dacouch

I wonder if the Swintons employee has even heard of the Ombudsman?

[FONT=Verdana, Arial, Helvetica, sans-serif]1 overview [/FONT]

[FONT=Verdana, Arial, Helvetica, sans-serif]Exclusion clauses are an accepted and well-understood part of all general insurance products. The insurer describes the areas of claim it is prepared to cover, then sets out the particular circumstances it believes it is necessary or appropriate to exclude. The salesperson, in accordance with the industry codes, explains the main elements of the policy (including the exclusions). When choosing a product, the potential policyholder takes account of the cover available and the effect of the exclusions. [/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]That’s the theory. The practice can be rather different – as illustrated by the number of problems policyholders bring to us about insurers’ use of exclusion clauses. Customers are often concerned that insurers use ‘small print’ exclusions to justify rejecting claims where customers thought they were covered. Of course, such concerns do not always lead us to criticise the insurer. Where exclusions are clearly expressed and of general application, they are an entirely appropriate part of the insurance contract and the ombudsman will uphold them. In this issue, however, we set out a number of cases where we concluded we could not support the wording of an exclusion, or where the facts of the case did not justify relying on the exclusion. [/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Two types of exclusion have given rise to particular concerns and debates with insurers and policyholders: [/FONT]

• [FONT=Verdana, Arial, Helvetica, sans-serif]those that dramatically reduce the range of cover actually provided from that set out in the cover section of the policy; and [/FONT]
• [FONT=Verdana, Arial, Helvetica, sans-serif]those where insurers exclude cover unless policyholders exercise a degree of care over their possessions or well-being which goes significantly beyond the degree of care most of us actually exercise. [/FONT]

[FONT=Verdana, Arial, Helvetica, sans-serif]Exclusions of the first type may occur where the marketing of policies suggests a scope of cover that, taking the exclusions into account, the insurer never intended. Sometimes this is simply a matter of customer misunderstanding. However, in other cases it can raise concerns that the customer was misled when making the purchase. [/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]This problem is not restricted to one sector of the industry but is of particular concern to policyholders of health-related products, where examples include: [/FONT]

• [FONT=Verdana, Arial, Helvetica, sans-serif]exclusions dealing with pre-existing medical conditions; [/FONT]
• [FONT=Verdana, Arial, Helvetica, sans-serif]exclusion of mental illness from sickness cover in travel and loan protection policies; and [/FONT]
• [FONT=Verdana, Arial, Helvetica, sans-serif]exclusion of chronic conditions in private medical expenses policies. [/FONT]

[FONT=Verdana, Arial, Helvetica, sans-serif]‘Two types of exclusion have given rise to particular concerns and debates with insurers and policyholders.’ [/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Many of these exclusions are problematic. They generally involve terms that are not well understood by policyholders, such as ‘chronic’ and ‘pre-existing condition’, and they can fundamentally alter the value of the product. In section 2 we look in more detail at specific problems that arise from the chronic condition exclusion. [/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]The second sort of exclusion concerns circumstances where insurers exclude cover unless policyholders exercise a degree of care which goes significantly beyond that which most of us actually exercise. Insurers rely on the exclusions to reject claims arising from the very circumstances for which policyholders sought the protection of insurance in the first place – circumstances they may understandably consider part of the normal everyday course of events. [/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]I imagine most of us, for example, have left the car keys in the ignition for a moment while we got out of the car to pay at a petrol station or collect the final item from the hallway of our home before setting out on a journey. Foolish – possibly – but common behaviour and not, I suggest, generally indicative of a policyholder’s failure to take reasonable care of his car. I am concerned by the apparent increase in insurers’ reliance on such exclusions. In section 3 we discuss our stance on unattended cars and keys left in the ignition. [/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Insurers are, of course, free to decide on the extent of cover they wish to provide. But if exclusions require policyholders to take abnormal precautions to protect their well-being, I do not consider them reasonable unless the significance of the exclusion was brought very clearly to the policyholder’s attention at the point of sale. [/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]I expect most of us view general insurance products as an uninteresting but necessary purchase. As with other products, we rely on marketing material for information about what we are buying. In many sectors of the industry, customers see insurance as a standard commodity – differing very little from one provider to another. The idea that they take the care over choosing a policy that perhaps they should is clearly not borne out by the facts. New and convenient methods of sale, not least the internet, tend to encourage a view that insurance is something we can obtain without too much thought. A recent advertisement for an internet-based service made much of the fact that car insurance could be bought during the television commercial break. We comment on internet sales in section 7 of this issue. [/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]These trends are not new and will not be reversed but they have consequences for the way policies are written. They are also an important background to our view on the degree to which insurers should be able to rely on exclusions in individual cases. My view is that unless insurers take steps to address these issues, the ombudsmen will, over time, have to place less weight on the significance of exclusions and more on the general environment in which the policy was sold. [/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Tony Boorman
principal ombudsman, insurance division
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[FONT=Verdana, Arial, Helvetica, sans-serif]http://www.financial-ombudsman.org.uk/publications/ombudsman-news/1/overview.htm
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dacouch

[FONT=Verdana, Arial, Helvetica, sans-serif]7 internet sales[/FONT] [FONT=Verdana, Arial, Helvetica, sans-serif]We are frequently asked by the industry for our views on internet sales. We have not, to date, had to consider any case where the nature of such a sale has been a relevant matter at dispute. With the increasing emphasis on internet sales, however, this can only be a matter of time. [/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]In principle the internet has a number of advantages as a sales channel. It can allow a potential policyholder to review and compare competing policies, at leisure. It can also ensure both parties have access to a common and contemporary record of the transaction and of the information they exchange. A well-designed site allows for common questions to be answered clearly, accurately and consistently. [/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]However, there are at least as many potential pitfalls. In practice, the guidance available to policyholders is often limited. There is little evidence that they are alerted to differences in policies other than those of price, except for a general exhortation to study policies carefully. Instead, many sites – particularly those operated by intermediaries – are advertised for the convenience and speed of transaction. This, taken together with site design, can reinforce a view that the policies quoted are largely identical for all practical purposes except price. [/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Industry codes on sales apply as much to internet sales as to other types. It remains important to draw customers’ attention to the main features of the policy and to be in a position to advise on its suitability. It would be a matter of concern if firms interpreted this as simply requiring customers to tick a general acceptance box, rather in the style of certain software licence agreements. While the matter would need to be considered in a test case, our initial reaction is that such a restricted interpretation of industry code requirements is unlikely to be supported by an ombudsman. [/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]The internet provides a good opportunity to highlight both the major points in a particular policy and significant variations between different policies. We suggest this might best be achieved without the need to move between pages and, ideally, in an interactive way, which requires customers to confirm that their attention has been drawn to each significant policy feature. Customers should be able to read the full policy being offered, on-line, before completing the purchase. Carefully designed sites could also help provide customers with reliable and focused advice on the implications of those policy differences. We hope the industry will take up the challenge of producing informative and customer-focused sites. [/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Of course, the ready availability of competitive quotations is of general benefit for customers. However, this may result in some difficulties for a small number of them. Having completed the required information to the best of their ability, these customers may seek a cheaper quotation by re-visiting the site and providing revised information. Sometimes this may be an entirely genuine attempt to provide, as accurately as possible, the information the insurer has requested. In other cases, however, it may amount to deliberate non-disclosure of material facts. [/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]A well-designed system should be able to track such cases and ensure customers are directly alerted to the consequences of non-disclosure. Some insurers might argue that those policyholders who are foolhardy enough to misinform them face the risk that, should a claim arise, the insurer will repudiate it for non-disclosure. However, where the insurer (or an intermediary) is aware that a policyholder revised information before purchase, it seems to me it is duty bound to make clear the consequences of non-disclosure. [/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Any case that might come to us on these points will, of course, need to be considered on its own merits. However, it seems likely that we would be looking for evidence from the firm of: [/FONT]

• [FONT=Verdana, Arial, Helvetica, sans-serif]the overall design of the site at the time of initial application; [/FONT]
• [FONT=Verdana, Arial, Helvetica, sans-serif]the questions asked of the customer (and options for any standard answers); [/FONT]
• [FONT=Verdana, Arial, Helvetica, sans-serif]the steps the customer had to take to complete the transaction, including the highlighting of major policy features; [/FONT]
• [FONT=Verdana, Arial, Helvetica, sans-serif]any revisions by the policyholder to the information provided; and [/FONT]
• [FONT=Verdana, Arial, Helvetica, sans-serif]any warnings given to the customer. [/FONT]

[FONT=Verdana, Arial, Helvetica, sans-serif]Insurers will wish to note these points in their own complaint handling. If they do not have a clear record of the site design, information given by the customer, and policy wording at the time of the application, we will need to rely heavily on the customer’s recollection of the application process.[/FONT]


http://www.financial-ombudsman.org.uk/publications/ombudsman-news/1/internet-sales.htm

dacouch

You have to love the Ombudsman

debjk

financial_illiterate wrote: »

I agree entirely, I think its a ridiculous exclusion; I just feel that the Ombudsman could perhaps expect a policyholder to read their Key Facts document at the very least. Thats what its for.

But I don't want to sound like I'm on the side of the insurer, because I'm not. Its a rubbish policy.

The thing is we did what thousands of people do get your policy over the phone by the time documents have arrived car is already being driven and insured. The documents were looked at but in a way that you do when you already have it not in a way where you are deciding whether to have it or not. Maybe we should of examined the policy wordings better but this is only written on one piece of paper saying "key facts" it even looks like a photocopy and doesnt look like an official document and tbh we only noticed it when we were looking through to make the claim

dacouch

Debjk have a read of the posts I have made which are copied and pasted from the Ombudsman's website. The Ombudsmans word is gospal to an Insurer / agent, I have highlighted some of the more relevant sections for you.

Read the post and use this in your complaint and gathering of evidence

financial_illiterate

debjk wrote: »

The thing is we did what thousands of people do get your policy over the phone by the time documents have arrived car is already being driven and insured. The documents were looked at but in a way that you do when you already have it not in a way where you are deciding whether to have it or not. Maybe we should of examined the policy wordings better but this is only written on one piece of paper saying "key facts" it even looks like a photocopy and doesnt look like an official document and tbh we only noticed it when we were looking through to make the claim

I'm not knocking you. We've all done it!

I think you've got a very strong case regarding misselling, but its entirely unfortunate that you only discovered this peculiar arson exclusion after the car was destroyed by arson.

Quentin

debjk wrote: »

Maybe we should of examined the policy wordings better but this is only written on one piece of paper saying "key facts" .....

When pursuing your complaint, it may be better not to "major" on this - the policy does say that fire caused by "vandalism or malicious intent" is not covered.

dacouch

As Quentin has said explain the circumstances of your purchase of the Insurance eg you were looking at a number of companies and state what you were looking for in your quotation eg Third Party Fire & Theft.

I assume if the arson clause had been made obvious to you at the point of sale you would have selected a different Insurer, if this is the case point this out in your complaint

Quentin

Out of interest regarding Markerstudy, apart from excluding arson, they are another insurer to stipulate a current MOT (if required) must be in place in their policy, and will not pay out for damage to a car without one.

debjk

UPDATE

Swintons are investigating, they have said this takes up to 21 days and in the meantime not to get rid of the car because they may want to see it. Which is bloody stupid its parked on the road, its not secure cuz back window smashed, we dont have access to a drive or garage and the road tax is up the end of the month. We even had someone dump a carrier of used needles in the back the other day yet still Swintons say not to get rid of the car :mad: we cant afford to get it taken to a garage and then pay rent for it to stay there.