Refused insurance - very worried!

elmo11

Ah that makes sense. So it is of no benefit to me to be underinsured obviously (which I would like to state that I wasn't because I added it all up!) but how does it effect them?

*Scarlett

If you underinsure eg £20k contents cover when you actually have £40k you may not be paying the correct premuim as a higher level of cover would usually be more expensive.

Also a higher value of contents can be seen as a greater risk to insurers. As an extreme example, someone who needs £100k of contents cover and has lots of high value, high risk items such as jewellery, antiques, etc may be more likely to suffer a theft and the claim would be more expensive.

If you underinsure by 50% the insurer would only pay 50% of any claim. So if you made a claim for a TV at £500 they would only pay £250 less your excess fee. Or they may not pay out at all - they might say that they would not have accepted the risk if they had known the true value of the contents, in which case you are paying your money for nothing.

You could try this tool to calculate your contents value to see if it is comparable to what you had originally insured for.

http://www.legalandgeneral.com/home-insurance/contents-calculator/contents-calculator.html

When you mention your appliances, I appreciate that you may have warranties, insurance on them from the manufacturer or retailer but the still need to be included on your contents policy in case of a major fire or flood etc.

If you genuinely didn't know this, then I can't see how the insurer can say that you have "deliberately" underinsured.

If you are not happy with the way that the insurer has dealt with this issue you can complain here

http://financial-ombudsman.org.uk/

elmo11

I had valid insurance policies with the people who sold them to me in event of fire, flood and accidental damage. They were fully covered because I checked those policies before taking out the new insurance policy. I changed provider after 4 years with the previous one because they offered me a better price for insurance at the same level - and I had never had a problem with the previous insurance.

And my question still stands - I understand how it could effect me massively having my contents underinsured (and I wasn't). How does it effect the insurer? Why would it be a problem to them? I understand how they could say that they didn't want to insure me if I didn't meet the minimum level of cover for them, but what other disadvantage does it have for them?

And I have never been told that they think I have deliberately underinsured - and I have also never said I deliberately underinsured either.

elmo11

I've just spoken to them. They said that as far as they are concerned I was refused a policy because I undersured. I've explained to them about my other goods having separate policies etc and they're going to listen to the call and check what i was told and if it wasn't made out to be a huge deal (was explained to me in a non-chalant way, not put to me correctly etc) then they will send me a letter saying that all is ok. I'm gutted - when I insured I didn't have much (had only just moved into my new rented flat) and I went round and added everything up and £5000 seemed like a fair estimate (I only live in a one bed one bath flat). If I had known and had gotten this letter I would have re-estimated and I had no idea that it was such a big deal. If I had have I would have checked. i would have done whatever they asked. I now have to wait for the outcome of them listening to this call. What do I do next? I know I have to wait for this call to be listened to, but do I have any grounds to defend myself? I feel like I do, and other advice I have been given says I have but I'm really scared - I've never been in this position before.

Quentin

You need to wait for them to come back to you over this first appeal. (If their letter is the answer you want, then keep it filed for ever, should a problem arise in future over them "retracting" their original decision.)

If they play hard ball, then you can still put in another appeal via their complaints procedure. (This will be set out in the policy).

Then if their answer is still no good for you, you can escalate the matter all the way to the FOS (all at no cost to you) and get what would be a "final" adjudication on the issue. (Either in your favour or the insurer's)

If that failed, then you would still have court action, though you'd need proper legal advice before embarking on that, as you would then be involved in costs were you to lose.

elmo11

Thanks for explaining the steps involved. Do I have a case though? I think I do - I know that I was insured for an amount appropriate to what was in my home at the time I took out the policy. I know that I haven't lied, or purposefully underinsured. I know that I didn't receive a letter saying I was underinsured and to re-evaluate my contents. Surely based on all that I have done everything I should have done - I can't see how this is my fault!