Norwich Union - not new for old on buildings?

HappyG1rl

Just having a look at my Norwich union policy document and it says that "If you have provided the sum insured shown on your schedule, or if the schedule says ‘Overall limit of £500,000 applies’, we will not settle claims on an “as new” basis and will reduce any payment to reflect wear and tear"
I don't want to end up paying the excess and having a deduction for wear and tear too.

mattymoo

I had to download a Norwich Union Direct policy wording last night to check on another thread. Found the bit you are referring to on page 15 - policy conditions.

The insurance is on a new for old basis apart from clothing and linen - where a deduction is made for wear and tear. This is standard across the market.

What NU are saying is - if the sum insured is too low (less than the real value) they will switch from "new for old" cover to indemnity where you will receive the second hand value of the item allowing for wear and tear.

Most insurers (certainly on commercial insurance where I work) use a thing called the average clause. This would work as follows:-

Sum insured = £100k, true value = £200k.
Claim made for £50k damage, claim would be settled for £25k.
The claim is pro-rata to the amount of underinsurance, in this case, 50%.

It used to cause all kinds of problems on household insurance because to some extent the value is subjective and hard to arrive at a precise figure without huge household inventories. NU have therefore adopted this new clause to make things simpler - for themselves at any rate.

Interestingly, the average clause only used to be applied if you had insured for a figure below 85% of the true value. So if the value was £100k and you insured for £85k you were okay. The NU clause doesn't appear to allow that leeway but with a £500k building sum insured, the chances of it being invoked are pretty slim. If your house would cost more than £500k to rebuild then you probably wouldn't be insuring with NU but looking at one of the high net worth policies instead.

Remember, the rebuild cost of a house does not take into account the land value so if often a lot less than the market value of the property - particularly in desirable areas.

firesidemaid

if it's new for old then i would expect it to be put back in the condition it was found.

is the water damage brand new or has it been happening for a while? just a thought as if it's been happenening for a while would they maybe expect you to have done something earlier (sorry if i have got the wrong jist here).