Could be homelsse after insurace claim

norwichman_2

My house subsided on Christmas Eve, and is not economic to repair. When I bought the insurance I selected £120,000 as a rebuild cost. I turns out this is used to limit the total cost of any possible claim. Worse still they will take from this sum the cost of professional fees, clearing of debris, making safe, and scaffolding ect.

All these costs go through the roof with a subsidence claim. They have spent thousands. So far they have not told me how much is left but there will not be enough to buy a replacement house.

This in not treating the customer fairly. I could be homeless even though I had insurance to cover the house. They are not rebuilding so why use the £120,000 as a limit. Why should people be penalised because the claim is expensive.

Any advice would be appreciated.

Neil

TSx

£120,000 is a very low sum insured for buildings, that concerns me straight away.

It is entirely appropriate to use this as the limit for any payout, this is your 'sum insured' or the maximum amount which they are liable for (in most cases). How did you come up with the £120k figure?

edit: actually, i'm not so sure now... I just had a look in a couple of policy booklets, this is one definition I found for cost of rebuilding:

COST OF REBUILDING
The full cost of reconstruction of the Buildings in the same form, size, style and condition as when new
including the cost of complying with any government or local authority requirements, fees and
associated costs, including Architect and Surveyors Fees.

That would seem to suggest anything they've spent on trying to fix the subsidence shouldn't be taken into consideration, but I'm not an expert on subsidence claims so hopefully someone else will be able to help

Browntoa

sounds like you made possibly the fatal error of not insuring for the rebuild cost but for the value of the property

http://www.moneysupermarket.com/home-insurance/calculator/

Rebuilding Cost Information

This is an area that can often be open for debate between the insurer and the consumer. That's why it is the responsibility of the insurer to get this figure right.

Remember to insure the rebuilding cost of your home rather than the market value. Land normally accounts for about a third of the property's value, yet it is not under threat from theft, storms or fire. Consequently, covering the rebuilding costs of your home rather than the market value saves on your premium. It is often less costly to rebuild your damaged house than buy another as the land it sits on typically remains unscathed.

lisyloo

This in not treating the customer fairly.

On what basis do ou think this is unfair?
For example was it not in the documentation sent to you?

I'm not being judgemental, but we need to know why you think it's unfair to tell you whether we think you have a case.

and is not economic to repair

This sounds really suprising to me although I'm not an expert.
So they can't fix your house for £120K??????
Why did they start work on it if it wasn't economical to repair?
It may be that problems that they could not possibly have known about have occured during the work, but I think they do have to be accountable as they should not have started work and spent money if there as evidence available that it wasn't repairable.
So you could try to investigate whether they have been negligent in that respect.
Unfortunately to prove negligence will cost money as you'll need an independent view from someone qualified.

dunstonh

This in not treating the customer fairly. I could be homeless even though I had insurance to cover the house.

Whilst I sympathise with your situation, yes it is fair. If you set a low sum insured, like £120,000, then you are taking a significant risk. Yes you pay lower premiums and save there but in the case of a large claim, you lose out. That risk hasnt paid off for you.

It would be hard to think of any fair reason that you should have for exceeding the policy sum insured and paid for it.

When I bought the insurance I selected £120,000 as a rebuild cost.

For about the last 10-15 years, the most common type of building insurance policy provide automatic cover up to around £500,000 (some higher and of course there has been natural progression on that sum insured from those of 10-15 years ago). The type of buildings insurance policy where you select the sum insured tends to be used when your building is non standard or require large sum insured figures or where your policy is very old and has never been updated.

Did you buy the insurance with advice or DIY? If you got advice via a broker/adviser then you get consumer protection which would make you aware of such things as the sum insured being the policy limit and making sure the figure is suitable. However, if you DIY and buy without advice then you take on the responsibility for knowing what you are doing.

So, did you DIY or use a broker/adviser?
What made you choose such a low figure of £120k on an old style sum insured policy?

alistair.long

If you have been offered £120 000 less making it safe scaffolding etc...
You can then repair the house, or if it is not viable, you can buy another house, and sel the subsided house, or brake it down and sell the land.

trebor21

£120k would be enough to rebuild most houses,
Just becasue house prices are higher than this doesnt mean it costs this much to build! you already have the land which is one of the big costs of buying a home!

hcb42

trebor21 wrote: »

£120k would be enough to rebuild most houses,
Just becasue house prices are higher than this doesnt mean it costs this much to build! you already have the land which is one of the big costs of buying a home!

#

It could be enough to rebuild "some" houses.

otherwiser this is misleading, I dont think I have had a house in a long time with a rebuilding cost this low.

Policies with no rebuilding sum insured have been around for more than 20 years though, the ones where you have to insure this way are few and far between.

Building insurance is relatively cheap too, compared to contents, so if unsure, then up the figure...

kingstreet

norwichman wrote: »

When I bought the insurance I selected £120,000 as a rebuild cost

The obvious question here, is why?

A rebuilding cost is calculated using the square metreage of the property, multiplied by a factor for the location, plus an allowance for site clearance and professional fees. It should be calculated carefully and most people use the rebuild cost from their mortgage valuation report when they buy, plus an allowance for inflation each year, or buy cover of a "blanket" nature with a sum insured high enough to cover every eventuality, even unlimited liability.

What method did you use for calculating the rebuild cost? Did you use a calculator like the one on the ABI site, or did you take the figure from a report by a surveyor or something similar you could present to the insurer?

norwichman_2

Thank you all for your replies

The policy details state “Buildings Standard £127,000” and quoting the “How much to Insure For” section says “Buildings your sum insured should be enough to rebuild your home. This is the home itself, domestic outbuildings, garages, terraces, paths, drives, walls, gates, fences. The market value of your home is not a suitable guide.

There is no reference to add £40,000+ just in case you have a subsidence case.

You buy insurance to cover yourself against any eventuality. My ex house Is small a band A end of terrace. No where on the policy did it ask how much the market value is. I answered the only question of rebuild cost I think quite fairly. They are not rebuilding the house so why use the rebuild cost?

FlameCloud

Because that is the sum insured you set when taking out the property.

Where is the property (general area), and do you know the sq m of it?