Cash Payout For Insurance Claim?

whizzkid001

Not sure if anyone can advise, now that our insurer has been told by the FOS to accept and process our flood claim, which is for a new kitchen, kitchen flooring and decoration (and all associated labour), can we insist on a cash payment (we would provide them with quotes of course) so we can arrange the work with suppliers and fitters of our own choosing?

FlameCloud

Yes, you can have cash settlement. In short, loss adjusters love it, insurers hate it. There are several things to watch out for-

1. You would only get what it cost the insurers to do something. So for example if the insurers get a discount on the flooring you want, the cash settlement would be less this discount.

2. The policy will technically become an indemnity policy, rather than a replacement. This will mean wear and tear is deductible, although this will really depend on how clued up the insurer is.

whizzkid001

FlameCloud wrote: »

Yes, you can have cash settlement. In short, loss adjusters love it, insurers hate it. There are several things to watch out for-

1. You would only get what it cost the insurers to do something. So for example if the insurers get a discount on the flooring you want, the cash settlement would be less this discount.

2. The policy will technically become an indemnity policy, rather than a replacement. This will mean wear and tear is deductible, although this will really depend on how clued up the insurer is.

Thanks for that. It's just that our claim has been on the back burner for 2 & a half years (!) whilst the FOS investigated, now they have finally ruled in our favour. They've actually told our insurer they mustn't deduct for wear and tear so that's ok.

We were a little worried about asking for cash as their loss adjuster is due round next week and being the same guy as originally rejected our claim, we wanted to know where we stood with asking outright for cash from them.

FlameCloud

If the adjuster has any sense he will bite your hand off. Get two quotes, give them two him and say this is what we want.

In contentious claims I always find it is better to get shot. This is primarily because feelings are already running high and if you force contractors on a PH then all they will do is pick and find fault with things, which to be frank I (an almost all adjusters!) cannot be bothered with. At the end of the day it isn't the adjusters money so its no real beef to pay it out, especially given the FOS appear to have ordered this, so his principals cannot turn around and tell him he should not have accepted the claim.

whizzkid001

Maybe I'm just being paranoid, but from our original dealings with him 2+ years ago, and his bolshy arrogant attitude then, I'm kind of expecting him not so much to refute the claim - which he can't anyway now - but to still try perhaps to limit the payout.

It was basically a kitchen flood which had ruined the flooring and all the base units, which were all bespoke. I can see him almost saying that they will only pay for the base units - even though there is no way on earth we can replace and match just the units that were damaged. I intend therefore to hold out for a full kitchen replacement.

FlameCloud

If the policy you have doesn't include a matching of items clause then the insurers are only responsible for the damaged items.

That being said, there was an FOS ruling back in 2001 where they said that the insurer was to contribute 50% towards the cost of the undamaged items. However, this was a long time ago and I know from recent experience that the more obvious and clear a clause is in a policy the greater the chance of them siding with the insurer on a point of contact.

whizzkid001

Just found a FOS ruling from only 2007 where they upheld a complaint & told the company to pay for all units - this was even after the insurer had already initially offered only 50% towards the remaining units - http://www.financial-ombudsman.org.uk/publications/ombudsman-news/58/58-home_insurance.htm

dacouch

Thats a completely different scenario and is about replacing the actual units that were damaged

FlameCloud

Assuming you are talking about 58/5, then this situation will not apply to you.

In that example, all bar one of the units were damaged by the water however the insurers argued that because the units were old a new kitchen would be significant betterment and as such an indemnity settlement should apply. This is what the FOS wouldnt let them do.

In your case, assuming it is a typical kitchen with a rough 50/50 split of base/wall units and only the base units are damaged then the FOS will not force them to replace them all.

whizzkid001

FlameCloud wrote: »

Assuming you are talking about 58/5, then this situation will not apply to you.

In that example, all bar one of the units were damaged by the water however the insurers argued that because the units were old a new kitchen would be significant betterment and as such an indemnity settlement should apply. This is what the FOS wouldnt let them do.

In your case, assuming it is a typical kitchen with a rough 50/50 split of base/wall units and only the base units are damaged then the FOS will not force them to replace them all.

Guess so, but even if they pay 50% towards the rest it'll help.

Would it also be quite normal to ask for a cash payout for all the other work needing doing too? In essence, we need the following jobs done but obviously prefer to use all our own local contractors:

1) uplift of the old laminate flooring
2) complete drying out under floor
3) replacement of flooring and wooden joists
4) ripping out of kitchen
5) refit of replacement kitchen (base units + hopefully 50% of others) inc
associated electrical/gas/plumbing
6) removal of debris
7) tiling costs
8) redecorating costs

Obviously we would provide them with at least 2 quotes for each - multiple jobs above could well be undertaken by some of the contractors.