Is the house insurance valid?

Elvisia

My mother was having a conversation with me about how tight my father is, and she mentioned that he's insured our four bedroom house as a three bedroom, as he doesn't want to pay the full premium for a four bedroom. It's essentially an old style 3 bed semi that had an extension put on which means it's three double rooms, and a fourth box room, which is about 7ft sq so it's small, but you can put a bed in there and it was used as a bedroom for 19 years. He says it's just a study and not a bedroom.

My query is, is this classed as fraud, and would our house be covered if anything happened to it? I assume he's claimed it's three bedroomed for both buildings and contents. Surely you can't just decide a bedroom is a study, otherwise he might as well go the full hog and say one of the double rooms is used as a study (it's an office) as well so it's only a two bed house and pay even less insurance?

phill99

Insurers will use any excuse to refuse payment. Your father has failed to dislose all relevant and appropriate facts which make up the contract between your parents and their insurers. Effectively he has misled them. Don't be surprised if they refuse to pay a claim in the event if a loss.

hcb42

he is being penny wise, pound foolish

the difference in premium must be relatively minimal each year, compare that with losing everything in a fire, and not having enough then to rebuild etc.

phill99

hcb42 wrote: »

he is being penny wise, pound foolish

I would use a different phrase: f#####g stupid.

Faith177

My home insurance company define a bedroom as

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Also if your dad was to sell it would he advertise it as 4 bedrooms? If so then the company would have a really good argument against not paying out.


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HappyMJ

Elvisia wrote: »

My mother was having a conversation with me about how tight my father is, and she mentioned that he's insured our four bedroom house as a three bedroom, as he doesn't want to pay the full premium for a four bedroom. It's essentially an old style 3 bed semi that had an extension put on which means it's three double rooms, and a fourth box room, which is about 7ft sq so it's small, but you can put a bed in there and it was used as a bedroom for 19 years. He says it's just a study and not a bedroom.

My query is, is this classed as fraud, and would our house be covered if anything happened to it? I assume he's claimed it's three bedroomed for both buildings and contents. Surely you can't just decide a bedroom is a study, otherwise he might as well go the full hog and say one of the double rooms is used as a study (it's an office) as well so it's only a two bed house and pay even less insurance?

It's not fraud (not the criminal offence). They may only pay out 75% of any claim made through so you are basically only insuring 75% of the property. Even if a small claim is made for let's say £4,000 they will only pay out £3,000 and you have to cover the rest. They may even pay less.

InsideInsurance

As the OP has presented it then I would say it is fraud by deliberately miss representing the facts to obtain financial benefit (ie lower premiums). Of cause insurers generally just void policies and may load to CIFAS for fraud rather than passing them to the police to pursue a criminal conviction.

If it was an accidental miss representation (ie because its used as something other than a bedroom it was an honest mistake) then the insurers may not void the policy but clearly wont simply payout on any claim in full either.

The idea of if you declare 3 rather than 4 bedrooms you only get 75% of your claim paid is an interesting one. Never heard of it before and really as a concept it would only work for a blanket sum insured policy and then not really

Looking at Barclays, as a random choice, a 4 bed B&C came out at £433 and a 3 bed B&C was £393 with no Personal Possessions, bikes, laptops etc on either given these would be uniform. So to give a 25% deduction for a 10% deduction in premium wouldn't be fair.

Elvisia

He has done it to pay less, and he is presenting the house as being smaller than it is. He's an idiot, and he hates paying out for the 'un-fun' things in life, but we all have to and it's just infuriated me that he's done this. I was curious as to how much trouble he'd get in for it, and if it means we're insured at all. I assume he'd argue that the fourth room is too small to be a bedroom, and is currently used as an office (and dumping room) so he didn't think it was a bedroom. If he sold the house then I am sure it would sell as a four bedroom, other houses in our road have a smaller fourth room and they're counted as four bedrooms.

I will try to have a delicate conversation with him and see if he'll change it.

InsideInsurance

If the insurers believe it was a mistake there will be a penalty but the policy will stand. If they believe he intentionally answered incorrectly they may decide to void the policy. This obviously assumes the issue comes to light at claims stage, if he owns up now about his mistake the insurers will just charge an additional premium (and probably an admin fee)

Elvisia

If we change insurers (and insure it properly) would they know that the house was previously insured as only three bedroom? I also suspect he's not getting the best rate anyway. He probably bought the insurance from a door to door salesman, he usually buys whatever tat they've got going.

InsideInsurance

I have never looked at what goes to CUE for home insurance (and of cause it would depend if both insurers actively use CUE).

On the basis you will be declaring something that is a higher risk (ie the additional bedroom) I suspect you'd be highly unlikely to get into any "trouble". It is certainly possible for people to put more bedrooms into a property so not unheard of for bedroom count to increase and if you are going to a competitor it isnt really in their interest to inform the prior insurer that they may have been short changed