Before you buy house insurance on price alone read this

dacouch

mic200202 wrote: »

Yes, and from the start of the very same article which you must have missed...(my highlighting in bold...)

The sum insured is an important component of most household policies and policyholders need to take reasonable steps to assess this amount as accurately as possible. We will support those insurers which reduce payments to policyholders where the total sum insured is clearly quite inadequate to cover the property at risk.

And now your point is what exactly???

This article is clearly aimed at policyholders where the sum insured is reasonable in proportion to the claim.

The logic of your argument is that people should just insure for what they want and in the event of a loss the Ombudsman will step in and force the insurer to pay up the full amount?? Crazy.

You have still not provided a shred of evidence to support your reply to my post.

And you call my advice bad...

Have you read the Ombudsman notes properly, he in effect states that it's important that the sums insured are correct. However the last two paragraphs which I quoted are basically saying that if a policyholder uses the minimum sum insured recommended by the mortgage providers surveyor. Then should this not be sufficient, the Insurer should pay the claim in full.

My argument was not that policyholders should insure for what they want and expect the Insurer to pay in full. It was in the context that if they follow the advice of the mortgage providers surveyor then the building claim should be paid.

The Ombudsman assumes the general public have a very basic knowledge of Insurance. If they are advised by a professional eg the mortgage providers surveyor, the Ombudsman's view is the public will take this as gospal, hence him ruling in these types of cases that the Insurer should pay the claim.

I'll requote the entire note from the Ombudsman for you, read it again.

"exceeding the sum insured

The sum insured is an important component of most household policies and policyholders need to take reasonable steps to assess this amount as accurately as possible. We will support those insurers which reduce payments to policyholders where the total sum insured is clearly quite inadequate to cover the property at risk.

However, assessing the correct amount is not an exact science and it is evident from our caseload that many policyholders find it a genuinely difficult assessment to make. Even where they have made a full and honest attempt to value all their household contents, they may be under-insured. We therefore take a sympathetic line where more detailed scrutiny by a loss adjuster suggests the sum insured may be somewhat short of the true replacement cost.

Policyholders can find valuation a significant problem in the case of contents policies, but it may be even more acute a problem in the case of buildings policies. Rebuilding costs are something that most householders can only guess at. Householders purchasing a property with a mortgage will usually obtain this valuation from the lender’s surveyor. Many other policyholders will rely on the purchase price (a notoriously poor indicator of rebuilding costs).

Even where the purchaser has obtained a good rebuilding cost estimate, it may not represent the maximum potential cost of rebuilding. Albeit rarely, actual rebuilding costs can necessarily exceed the sum insured; an example is given in case study 04/16 on page 20. We do not believe it reasonable in such cases for the insurer to rely on the maximum sum insured to limit their liability. It is precisely this sort of unusual eventuality that policyholders expect their insurance to cover."

http://www.financial-ombudsman.org.uk/publications/ombudsman-news/4/exceeding-the-sum.htm

vaio

mic200202 wrote: »

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Thanks for that Vaio.I stand by my original comments.This original policy (proposed by Abbey) was based on a mimimum recommended sum insured in the survey report.

On the original case - the loss would have been assessed as being underinsured by 42% ie £60k against the loss of £140k (my original post used 60% as an example only).

Whether a total loss or not, an insurer can reduce the amount paid in claim by the proportion underinsured.They can even refuse to pay anything at all.I agree its more common to reduce claims with smaller sums as they are much more common than a total loss.

So this claim may have been refused completely,reduced by 42%, or possibly paid up to a max £60k.My clear understanding of Abbey's policy (this was 18yrs ago) at the time is that they would have applied a reduction irrespect of the amount and whether a total loss or not.

Either way the client would have been up the creek.My point was to demonstrate the dangers of underinsurance and acceptance of minimum rebuild costs.

I have heard all the arguments before.Yes, but you can claim off the surveyor,and the insurance co will cover the full amount anyway.What total dross.All based on hot air.

The surveyor did not advise on a sum insured but merely that this is a mimum rebuild cost.Unlikely that a claim would be sucessful against him.

I have several examples of where I have seen underinsurance impact severely on customers over the years.

So,in summary,I am not mistaken on this, and I would ask that you retract the comments you posted above.

I sometimes think that reading the threads on here and watching misselling scandal after misselling scandal/bank bailouts etc on the news the has given me an unfairly jaundiced view of the financial services industry.

Then people like you pop up and I end up thinking maybe my jaundiced view is possibly not jaundiced enough

As for retracting my comments.......:rotfl::rotfl::rotfl::rotfl:

mic200202

vaio wrote: »

I sometimes think that reading the threads on here and watching misselling scandal after misselling scandal/bank bailouts etc on the news the has given me an unfairly jaundiced view of the financial services industry.

Then people like you pop up and I end up thinking maybe my jaundiced view is possibly not jaundiced enough

As for retracting my comments.......:rotfl::rotfl::rotfl::rotfl:

Not as jaundiced as posting a load of nonsense really.

wiltslass

Interesting thread. I am currently looking at home insurance quotes as current insurer has increased the renewal cost significantly after a number of years with them. Have been looking at Legal and General. Seems to be good value.

mic200202

dacouch wrote: »

Have you read the Ombudsman notes properly, he in effect states that it's important that the sums insured are correct. However the last two paragraphs which I quoted are basically saying that if a policyholder uses the minimum sum insured recommended by the mortgage providers surveyor. Then should this not be sufficient, the Insurer should pay the claim in full.

My argument was not that policyholders should insure for what they want and expect the Insurer to pay in full. It was in the context that if they follow the advice of the mortgage providers surveyor then the building claim should be paid.

The Ombudsman assumes the general public have a very basic knowledge of Insurance. If they are advised by a professional eg the mortgage providers surveyor, the Ombudsman's view is the public will take this as gospal, hence him ruling in these types of cases that the Insurer should pay the claim.

I'll requote the entire note from the Ombudsman for you, read it again.

"exceeding the sum insured

The sum insured is an important component of most household policies and policyholders need to take reasonable steps to assess this amount as accurately as possible. We will support those insurers which reduce payments to policyholders where the total sum insured is clearly quite inadequate to cover the property at risk.

However, assessing the correct amount is not an exact science and it is evident from our caseload that many policyholders find it a genuinely difficult assessment to make. Even where they have made a full and honest attempt to value all their household contents, they may be under-insured. We therefore take a sympathetic line where more detailed scrutiny by a loss adjuster suggests the sum insured may be somewhat short of the true replacement cost.

Policyholders can find valuation a significant problem in the case of contents policies, but it may be even more acute a problem in the case of buildings policies. Rebuilding costs are something that most householders can only guess at. Householders purchasing a property with a mortgage will usually obtain this valuation from the lender’s surveyor. Many other policyholders will rely on the purchase price (a notoriously poor indicator of rebuilding costs).

Even where the purchaser has obtained a good rebuilding cost estimate, it may not represent the maximum potential cost of rebuilding. Albeit rarely, actual rebuilding costs can necessarily exceed the sum insured; an example is given in case study 04/16 on page 20. We do not believe it reasonable in such cases for the insurer to rely on the maximum sum insured to limit their liability. It is precisely this sort of unusual eventuality that policyholders expect their insurance to cover."

http://www.financial-ombudsman.org.uk/publications/ombudsman-news/4/exceeding-the-sum.htm

From your original post..

"I think a more important point is that an insurance advisor doesn't understand something as fundamentally basic as the under insurance example he gave in the OP and presumably advises his clients on that mistaken basis"

Now where you are is arguing over the vagaries of what the FOS may or may not do should a policyholder find themselves well and truly stuffed on a claim,where the insurer decides not to pay out the full amount of a claim.So I still don't understand how insurance co's deal with claims do I?

In effect, I am still right to say that on suffering a total loss an insurer can reduce the amount,or refuse to pay at all.Then the only recourse for the customer is to bring in the FOS right? And where exactly is the incorrect part of my origianl post then?

I think your comments on my original post, which was designed to highlight this very issue to the general public, were not warranted.The notion that I am not advising customers correctly is offensive and totally untrue.

vaio

mic200202 wrote: »

From your original post..

"I think a more important point is that an insurance advisor doesn't understand something as fundamentally basic as the under insurance example he gave in the OP and presumably advises his clients on that mistaken basis"........

Now you are mixing people up, the quote above is from me, not dacouch

Stop digging please

dacouch

mic200202 wrote: »

From your original post..

"I think a more important point is that an insurance advisor doesn't understand something as fundamentally basic as the under insurance example he gave in the OP and presumably advises his clients on that mistaken basis"

Now where you are is arguing over the vagaries of what the FOS may or may not do should a policyholder find themselves well and truly stuffed on a claim,where the insurer decides not to pay out the full amount of a claim.So I still don't understand how insurance co's deal with claims do I?

In effect, I am still right to say that on suffering a total loss an insurer can reduce the amount,or refuse to pay at all.Then the only recourse for the customer is to bring in the FOS right? And where exactly is the incorrect part of my origianl post then?

I think your comments on my original post, which was designed to highlight this very issue to the general public, were not warranted.The notion that I am not advising customers correctly is offensive and totally untrue.

If you're refering to my OP, this is what I actually said...

dacouch wrote: »

If you have followed the advice of a surveyor when selecting a building sum insured, the Ombudsman will normally require your Insurer to meet the full value of the claim even if it exceeds your sum insured. You may be required to pay the difference in the premium.

Which is correct as per the Ombudsman.

You're arguing over whether or not the Ombudsman would rule in favour of someone in the same situation. It's very clear from the Ombudsman's note that they almost certainly would.

Someone current in the same situation that was dealing with an adviser who understood the general ethos of the Ombudsman or a policyholder who had posted on a forum such as MSE. Would normally be able to resolve the situation by an official letter of complaint refering to the relevant wording from the Ombudsman. Most decent Insurers when dealing with such a complaint would back down and pay the claim. So the chances are that you would not even need to go to the Ombudsman to get such a claim settled.

If you frequent the MSE Insurance forum, you would know that the industry posters and the lay posters such as Mikey and Viao like to ensure the accuracy of the posts. One of the main reasons for this is if someone is in the same situation they will google it and probably land on this thread. If the information is accurate then they use it to get their claim settled as per the Ombudsman.

[Deleted User]

we have lived in a non standard eco house for two years, having quickly got insurance when we bought. We have now done the correct thing and gone to a specialist insurer and everything is covered, like the pv panels, rainwater harvesting, special build and so on. We went through a detailed and comprehensive list, which actually took a few days to work through. At the same time we went through one room at a time and did a very thorough cost evaluation of the contents and that included the special wood pellet stove and solar panels. Our contents cover has almost doubled and we now sleep easy knowing that we are properly fully covered. It was so easy to be a bit flippant previously and we had quite a shock at the actual value of what we own.

We have a special type of lock and we have to take keys out of doors in order to be fully covered

We were most definitely under insured for the last two years and it sends shivers down my back. What if???

mic200202

dacouch wrote: »

If you're refering to my OP, this is what I actually said...



Which is correct as per the Ombudsman.

You're arguing over whether or not the Ombudsman would rule in favour of someone in the same situation. It's very clear from the Ombudsman's note that they almost certainly would.

Someone current in the same situation that was dealing with an adviser who understood the general ethos of the Ombudsman or a policyholder who had posted on a forum such as MSE. Would normally be able to resolve the situation by an official letter of complaint refering to the relevant wording from the Ombudsman. Most decent Insurers when dealing with such a complaint would back down and pay the claim. So the chances are that you would not even need to go to the Ombudsman to get such a claim settled.

If you frequent the MSE Insurance forum, you would know that the industry posters and the lay posters such as Mikey and Viao like to ensure the accuracy of the posts. One of the main reasons for this is if someone is in the same situation they will google it and probably land on this thread. If the information is accurate then they use it to get their claim settled as per the Ombudsman.

Well we are now quite some distance from stating an insurance co would not reduce a sum on total loss now aren't we? I'm sorry it was your good self who referred everyone to the FOS not me.


I have read the case studies referred to by the FOS.It is clear they involve situations where a sum insured is deemed to be adequate in the first place.If the total cost to reinstate exceeds the sum insured then they can ask the insurer to make up the difference.It is a leap of faith to deem these case studies as evidence the FOS would compell all insurers to cover losses on all underinsured events.

If you think an insurer would feel obliged to make up an £80k shortfall just in case they get a complaint you're living in a dream world.Fos or no FOS that just aint gonna happen at the drop of a hat.

The other point of referring to a surveyors min rebuild cost estimate as giving advice to actually take out that amount of cover is nonsense.The RICS had that one covered a long time ago.Otherwise all mortgaged properties could just say well I'll just insure for this min amount and the great and good of the FOS will compell my insurer to cover me because I have a survey report that has this figure on there I didn't know any better...oh really.

I do hope some people google and find this post so they will see how some posters make blanket comments as did your pal Vaio and then yourself.Then to justify the ridiculous position you have taken by scrambling off to research the dusty pages of the FOS news only to find you are now bogged down by attempting to almost speak on behalf of the FOS.God help the unfortunate joe public who relies on so called armchair experts for advice.

dacouch

Your understanding of how the Ombudsman works is worrying for someone who purports they are an expert on Insurance.

The link I provided is a guidance note, this is to help policyholders understand and also for Insurer to know how the Ombudsman views certain situations.

The case he refers to eg 04/16 is a typo as it bears no relation to the the guidance note.

I don't know where you are getting this from "Well we are now quite some distance from stating an insurance co would not reduce a sum on total loss now aren't we? I'm sorry it was your good self who referred everyone to the FOS not me." I have linked to the Ombudsman clear guidance that proves you're wrong.

You know full well (Although I'm worried you don't) that if a client had insured for the minimum recommended amount by the surveyor. That the Insurer would have index linked the sum insured. If the matter had arisen some years after the inception of the policy. Then as per industry standard the building sum insured would have increased as per index linking to the minimum recommended sum insured as per the surveyor. The ombudsman would still require the Insurer to pay the building claim without deduction for average.

Most Insurers would agree the claim after a call from a broker or even the Abbey (Who actual understood insurance) reminding them of the Ombudsman's guidance on this matter. If this failed then an official complaint would normally do it or even a quick call to the Ombudsman who will normally ring the Insurer directly in a situation such as this where they have clear guidance to advise the Insurer they should pay the claim. If these failed then a complaint to the Ombudsman would resolve the situation.

With regard to making blanket comments, you're the one how made the mistake which was pointed out to you by a number of other people (Flamecloud is a senior loss adjuster). We were just correcting the wrong assertion you made.

Maybe you need to stick mortgages as your understanding of Home Insurance is not as good as you think it is.

I would not be surprised if my biggest Chubb client's single premium is more than your entire book of business with L&G. While we're on the subject of L&G by account with them is £200k+

With regard to your comment about google, it has worried me, so just in case anyone does google and land on this page. It's important to keep the correct information as the most recent post. So here it is.

"exceeding the sum insured

The sum insured is an important component of most household policies and policyholders need to take reasonable steps to assess this amount as accurately as possible. We will support those insurers which reduce payments to policyholders where the total sum insured is clearly quite inadequate to cover the property at risk.

However, assessing the correct amount is not an exact science and it is evident from our caseload that many policyholders find it a genuinely difficult assessment to make. Even where they have made a full and honest attempt to value all their household contents, they may be under-insured. We therefore take a sympathetic line where more detailed scrutiny by a loss adjuster suggests the sum insured may be somewhat short of the true replacement cost.

Policyholders can find valuation a significant problem in the case of contents policies, but it may be even more acute a problem in the case of buildings policies. Rebuilding costs are something that most householders can only guess at. Householders purchasing a property with a mortgage will usually obtain this valuation from the lender’s surveyor. Many other policyholders will rely on the purchase price (a notoriously poor indicator of rebuilding costs).

Even where the purchaser has obtained a good rebuilding cost estimate, it may not represent the maximum potential cost of rebuilding. Albeit rarely, actual rebuilding costs can necessarily exceed the sum insured; an example is given in case study 04/16 on page 20. We do not believe it reasonable in such cases for the insurer to rely on the maximum sum insured to limit their liability. It is precisely this sort of unusual eventuality that policyholders expect their insurance to cover."

P.S Stop digging yourself into a hole