New for old cover... new cost exceeds "single item limit"?

MrChips81

Hi All,
Looking for a bit of advice after having my bike stolen last week. I've got a phone call with Axa tomorrow to run through my claim. My policy docs are a bit ambiguous (aren't they all!) as it states that thefts from outbuildings are covered up to £3000, but under the "standard contents cover" info it states individual items are covered up to £1500.

My bike was around £1200 new at the time, so I didn't list it specifically on the policy.
However now looking at a new-for-old replacement...it's obvious that bike prices have actually rocketed and any similar bike (even just the new version of my bike) are now £2200:eek:

Anyone with experience in what I can realistically expect? Checking the ombudsman website seems to suggest that I should simply expect to be put back to the position I was before the theft, and that the new for old should therefore supply a new version of my bike.

If they stick rigidly to the £1500 limit, then they can't fulfill the new-for-old agreement.

Obviously they're not likely to pay out easily, but any advice on how I can simply get a new version of my old bike as this was what I got the insurance for.

Cheers!
MrChips

rs65

I don't see the amiguity. You have £3k cover for loss from outbuildings and you have a single item limit of £1500.

They can't fulfil new for old as you didn't tell them that the value of the bike was £2200. It is your responsibility to ensure you are adequately covered.

I'm pretty sure they will rigidly stick to the single item limit. I think the best you can expect is £1500 - assuming they don't feel that you deliberately chose to under insure.

Is there anything specific in your policy about bikes and security devices etc.?

MrChips81

Cheers for the quick reply.

I could see that would be the case if I had an article that I paid over £1500 for, and didn't declare it.

However when doing the applications etc, we were asked if we had anything "worth over £1500", and I answered no, because I paid under that amount for the bike when it was brand new. I don't see how I could be expected to say answer yes to that question... as it would be a lie.

If what you're saying is right then I'm a bit confused as to what point I should notice that prices have crept up over the £1500 limit?

I knew about the limit, however surely I can't be expected to track pricing for items, and obviously I can't tell the insurer it's worth over £1500 when i paid less than that for it?

lisyloo

we were asked if we had anything "worth over £1500", and I answered no, because I paid under that amount for the bike when it was brand new

Well that's very clear to me that what you said is wrong.
What something is worth is not necessarily what you paid.

then I'm a bit confused as to what point I should notice that prices have crept up over the £1500 limit?

£2200 is nearly 50% over so I don't think "crept" is appropraite here, but I'd say it would be reasonable to do an annual review.

however surely I can't be expected to track pricing for items

You should do an itinerary and review it annually - how else can you value your contents - finger in the air?

and obviously I can't tell the insurer it's worth over £1500 when i paid less than that for it?

Of course you can. My house is worth about £100K more than I paid for it.
If it burns down it needs to be rebuilt at the current rebuilding cost.
If contents need to be replaced then they need to be bought at current prices.

If you find part of insurance hard to understand (and there are lots of subtleties so that's nothing unusal) then it would be worth consulting a broker and getting them to advise you.
But I'd be suprised if anyone thought they could just put a finger in the air and guess and that would be perfectly ok and the insurer wouldn't mind if it was 50% out.

MrChips81

Ok well that does make sense when you put it in context of a "how much is your house worth". So I guess i've misinterpreted the question, although I never would expect "my old bike" to be worth over 2k, so it simply didn't enter my mind to declare it specifically.

Maybe i'm just dubious that it always works in the insurers favour, especially when inherently I haven't done anything wrong.
If I state "my bikes worth £5k", and pay the premium, i'm sure they wouldn't simply pay out the £5k, they'd be searching round for an "equivalent" model for as little money as possible??

dacouch

MrChips81 wrote: »

Maybe i'm just dubious that it always works in the insurers favour, especially when inherently I haven't done anything wrong.
If I state "my bikes worth £5k", and pay the premium, i'm sure they wouldn't simply pay out the £5k, they'd be searching round for an "equivalent" model for as little money as possible??

But you paid £1200, will possibly receive £1500 for it, with £2200 being the amount you should have insured it for and would have had to pay
an extra premium

mikey72

dacouch wrote: »

But you paid £1200, will possibly receive £1500 for it, with £2200 being the amount you should have insured it for and would have had to pay
an extra premium

So the alternative scenario is that is was an oversight, and the insurer should pay the full amount, less the cost of the extra premium.
See what the insurer says first, if they won't replace on new for old, as it was a genuine mistake, write a letter of complaint, then refer it to the FOS for their opinion on it.

System

I think you have been lulled into thinking that new-for-old meant that values were index-linked, so you didn't need to keep revaluing them.

That is exactly what most companies do with the house analogy. They index rebuilding costs to national house-building cost indices. They don't expect you to go out and get builders' estimates every year.
My insurers aren't interested in the house value anyway - they just say in effect it is insured "for whatever a 5 - bedroom house costs to build in postal district X".

It's a deliberate fudge by the insurers, and a trap, if yours is one, it would be easy to fall into.

lisyloo

although I never would expect "my old bike" to be worth over 2k

So you should look up any items that are close to your single item limit to check at least annually.
I'd say £1200 was close enough to warrant a quick check on the internet.

especially when inherently I haven't done anything wrong

You haven't correctly declared the value. If you want to be properly insured then that's YOUR responsibility (unless you want to pay someone else to do it).

If I state "my bikes worth £5k", and pay the premium, i'm sure they wouldn't simply pay out the £5k, they'd be searching round for an "equivalent" model for as little money as possible??

Correct. They work on current value, not just what you say.
If you get it too low then you're underinsured.
If you get it tool high then you're paying too much.

This is YOUR responsibility (how can anyone else possibly know about your contents).
It's not that hard to spend a few hours per year doing an itinerary and checking specifically on inidividual items that are close to the limit (5 minutes on the internet?).

But as Msikey says you might be oevr thinking and over-worrying this.
They might say fine and that this is what the expect and pay out.
Don't get your knickers in a twist over something theorectical. There's enough real problems to get annoyed about :-)

P.S. I have a really good insurer (Hiscox) and I'd expect excellent treatment from them, although they are not necessarily the cheapest.
When I took out the insurance they did ask me on what basis I'd valued my contents.
Insurance is like anything else in life where you get what you pay for.
Many people get the lowest price they can and obviously this doesn't come with top quality.
Now I believe that any insurer should treat your fairly but clearly if they are working on really tight margins then there is less leeway to be generous over mistakes.

FlameCloud

Clifford_Pope wrote: »

I think you have been lulled into thinking that new-for-old meant that values were index-linked, so you didn't need to keep revaluing them.

That is exactly what most companies do with the house analogy. They index rebuilding costs to national house-building cost indices. They don't expect you to go out and get builders' estimates every year.
My insurers aren't interested in the house value anyway - they just say in effect it is insured "for whatever a 5 - bedroom house costs to build in postal district X".

It's a deliberate fudge by the insurers, and a trap, if yours is one, it would be easy to fall into.

Would you like to suggest how you could index link contents, given that large amounts of contents decrease drastically in value (electronic stuff normally) and others increase drastrically (Asian Jewellery)?

System

FlameCloud wrote: »

Would you like to suggest how you could index link contents, given that large amounts of contents decrease drastically in value (electronic stuff normally) and others increase drastrically (Asian Jewellery)?

That's easy. I didn't have to value mine. RIAS just apply a standard value to the contents of an average house of the size insured, the same as they did for buildings. You only need to tell them if you want a higher level of cover.