I chose an AXA insurance & now I homeless

magpiecottage

rs65 wrote: »

To get that type of resolution will probably need FOS involvement but with the total costs involved it may be outwith their jurisdiction.

The complaint will be within FOS jurisdiction - it simply cannot award more than £150,000. However, there is nothing in the rules that says what has already been paid counts toward that limit.

Furthermore, pending the outcome of the appeal, the case of Clark v In Focus Asset Management appears to give a complainant a second bite in court.

In addition, FOS can recommend a higher payment. As an insurer, AXA has the funds to pay. When a client of a client had a claim of about a third of a million upheld by FOS, I suggested writing to the CEO asking if they intended to meet the FOS recommendation.

The underlying logic was that, as an insurer, AXA could afford to pay, so if they refused with the CEO's knowledge his career would be on the line.

A reply saying that it would be paid was quickly forthcoming and the complainant made sure his acceptance was back with FOS inside the one month time limit.

weejonnie

TurnUpForTheBooks wrote: »

Forgive me - we are talking about performance of the insurance contract here and you wrote:These other questions you mention are of passing interest only.

True - the major concern is the insurance. Not knowing the full facts I would hazard a guess that the water company may not be strictly liable for damage caused by escape of water. Does this come under the rule of Rylands v Fletcher? Water is presumably a natural usage of land.

Daniel54

I concur with rs65's summary and understanding of what we do and do not know.It is good that magpiecottage has been able to confirm this falls with the FOS' remit.

If I were complaining to the FOS and/or asking a senior manager in Axa to review the file, I would follow this line of argument :-

The principle of insurance is to restore the insured to the position they would have been in had the loss not occurred,subject always to the specific policy terms and conditions

The OP's house has been deemed a constructive total loss and the policy should therefore pay the buildings sum insured of £ 127,000 -there appears to be agreement that the loss is covered under the terms of the policy

The policy further covers up to 10% of the Sum Insured under the debris removal section and therefore responds for an additional total of £12.700 towards these costs

At this point the policy has responded in accordance with insurance principles and its limits are exhausted .

The remaining balance of the debris removal etc expenses is therefore uninsured .

The insurer could look to the insured to pay these,however he might well argue that he is not liable and in any case his ability to pay is contingent upon the monies received from his claim,the purpose of which is to indemnify him for the loss of his house.

In this highly unusual situation a sensible and equitable solution would be for Axa to agree to bear these costs,ex gratia and without prejudice.As magpiecottage suggests,the insurer can afford to pay whereas the insured cannot.

If Axa then choose to subrogate,that is their concern and not that of their policyholder,whose policy has recompensed him to the full extent allowed by its terms and conditions ( in the above I am referring only to the buildings section of the policy)

I am an insurance practitioner of over 35 years experience,but UK retail is not my area of expertise and these are my personal views only.

dacouch

Possible relevant(ish) Ombudsman decisions.

"04/18
household buildings - sum insured - reinstatement - whether insurer entitled to limit cost of reinstatement to sum insured.
Following a serious fire at Mrs Y's house in March 1999, the insurer appointed loss adjusters to assess the damage. They considered that repairs would not exceed the sum insured of £110,000. They also calculated that the sum insured was too low and that the cost of rebuilding would be £135,000. Mrs Y increased the sum insured to the amount they recommended.

The insurer paid over £7,000 for emergency works to make the property safe, but there was bad weather in April and further damage occurred. When tenders for the repairs came in, however, the lowest was for £139,250. The insurer agreed to reinstate the property, but it limited repair works to a total of £103,000 - the sum insured less the cost of emergency work. This was sufficient to rebuild the property, but left the first floor a shell.

Mrs Y said she had been promised that if she increased the sum insured to the amount the loss adjusters recommended, the insurer would meet the claim in full and would make no deduction for under-insurance.

complaint upheld
The policy gave the insurer the option of making a cash settlement, repairing, replacing or reinstating. The insurer had clearly opted to reinstate and was therefore bound to replace as new, with no deduction for wear and tear or depreciation. The cost was accordingly not limited to the sum insured.

If the insurer wished to impose a ceiling of £110,000 on its liability, it had to communicate that to the policyholder. It had not done this until after the house had been demolished and it could not impose the limit in the middle of agreed works. We required the insurer to meet the full cost of reinstatement."

"04/20
household - sum insured
Mr J insured his house for an index-linked sum - £285,000 - when he renewed the insurance in 1993. In February 1995, he discovered landslip damage to his tennis court. He appointed an engineer and notified the insurer. It became apparent almost immediately that the damage was progressing rapidly and, in March 1995, the insurer agreed to pay for emergency work to stabilise the site.

This work did not halt the slippage and a meeting was held in June 1995 to discuss possible remedies. Mr J asked the insurer to settle his claim by declaring the property a total loss and paying the full sum insured. However, the insurer's loss adjusters were of the opinion that the insurer's liability was limited to underwriting the cost of remedial work up to the sum insured.

Work continued, becoming more complicated as time went on, until eventually the site was stabilised. The insurer informed Mr J that the sum insured had been exhausted. He complained, asserting that the insurer had elected in June 1995 to reinstate the property instead of making a cash settlement, and that it was therefore bound to meet the balance of the full cost of repairing his house. This was estimated at £145,000.

complaint upheld
Cases of catastrophe such as this are fortunately very rare. The sum insured had been correctly calculated and was sufficient to cover the rebuilding and associated fees, as stipulated in the policy. However, it was not sufficient to cover the additional cost of stabilising the site. Although insurers are generally aware there is a theoretical possibility of rebuilding costs exceeding an adequate sum insured, the insurer in this case had not advised Mr J of this possibility.

The insurer had never agreed to reinstate the property regardless of cost. However, we did not accept it was appropriate for it to limit its settlement of this claim to the sum insured. The insurer had been closely involved in approving repairs and, once they had begun, both the insurer and the policyholder had effectively been committed to their completion. It was reasonable for Mr J to believe his property would be fully reinstated and he could not be said to have been indemnified if he was left with a badly cracked house on a stable site.

More generally, Mr J was not in a position to assess the likelihood of such rare combinations of events when he decided on the sum insured. The sum insured was generally accepted to be appropriate and we concluded that, in such cases, the sum insured should not act as an absolute cap on the insurer's liability. We therefore required the insurer to pay £100,000 towards Mr J's repair costs. We also recommended the insurer to meet the balance of his costs, although we had no jurisdiction to make a binding award for any amount in excess of £100,000."

Guidance note.

"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."

TurnUpForTheBooks_2

The principle of insurance is to restore the insured to the position they would have been in had the loss not occurred,subject always to the specific policy terms and conditions

The OP's house has been deemed a constructive total loss and the policy should therefore pay the buildings sum insured of £ 127,000 -there appears to be agreement that the loss is covered under the terms of the policy

The policy further covers up to 10% of the Sum Insured under the debris removal section and therefore responds for an additional total of £12.700 towards these costs

At this point the policy has responded in accordance with insurance principles and its limits are exhausted .

Sorry Daniel this is wrong and shows that whatever else you have absorbed in your insurance career, it may not have been any CII syllabus texts on principles of insurance, especially on indemnity.

The principle of indemnity is not "subject always to the specific policy terms and conditions". That phrase you've use is a shorthand disclaimer that insurance practitioners often put in letters to clients after their own personal attempts at explaining the cover in their own words. It basically says "I have given it my best shot, but if I am wrong, don't blame me, the specific policy terms and conditions take precedence". You cannot slap the phrase on a basic principle :rotfl:

Indemnity is a standalone principle that of course takes precedence over errors, restrictions or omissions in the policy wording, intentional or otherwise, which detract from the pure intention of the insurance contract. If you are going to refer to it as a principle it needs to be stated unadulterated else those specific policy terms or conditions you qualify it with might all too easily come straight round to the front of the argument and get in the way (as has clearly happened in this case).

Therefore there are indeed cases where to achieve indemnity, policy limits may not actually apply as I think has been mentioned several times by other posters.

magpiecottage

I think DACouch has cast more light on this than Daniel54.

This is because of FCA Principle 6, "A firm must pay due regard to the interests of its customers and treat them fairly."

Attempting to rely on what FOS considers to be a "technicality" is almost certainly going to be interpreted by it as a breach of Principle 6.

TurnUpForTheBooks_2

This is sounding like a game of trumps, magpiecottage!

Does a basic principle of insurance trump FCA principle 6 or do we perhaps have a double whammy in Neil's favour on this one?

Quentin

TurnUpForTheBooks wrote: »

This is sounding like a game of trumps, magpiecottage!

Does a basic principle of insurance trump FCA principle 6 or do we perhaps have a double whammy in Neil's favour on this one?

Rather than playing trumps, we see magpoecittage getting more and more the S Cowell of the board.

(He has taken to regularly dropping in at the end of threads to give us his judgement on the merits of posters in threads with different opinions, and declare "his" winner, even though everyone is entitled to voice an opinion, and no-one can be considered to know how this particular issue will be concluded as we haven't been given the full picture)

Daniel54

magpiecottage wrote: »

I think DACouch has cast more light on this than Daniel54.

This is because of FCA Principle 6, "A firm must pay due regard to the interests of its customers and treat them fairly."

Attempting to rely on what FOS considers to be a "technicality" is almost certainly going to be interpreted by it as a breach of Principle 6.

The OP asked for help in how to frame his complaint to the FOS and/or his insurer

I used the words " sensible and equitable" which I don't think are too far distant from Principle 6 to which you refer.

DACouche's helpful contribution followed mine and I did not have the benefit of that judgement history,particularly

"It was reasonable for Mr J to believe his property would be fully reinstated and he could not be said to have been indemnified if he was left with a badly cracked house on a stable site"

The OP should certainly use the information provided in any submission

.

Daniel54

TurnUpForTheBooks wrote: »

The principle of indemnity is not "subject always to the specific policy terms and conditions". That phrase you've use is a shorthand disclaimer that insurance practitioners often put in letters to clients after their own personal attempts at explaining the cover in their own words. It basically says "I have given it my best shot, but if I am wrong, don't blame me, the specific policy terms and conditions take precedence". You cannot slap the phrase on a basic principle :rotfl:

Indemnity is a standalone principle that of course takes precedence over errors, restrictions or omissions in the policy wording, intentional or otherwise, which detract from the pure intention of the insurance contract. If you are going to refer to it as a principle it needs to be stated unadulterated else those specific policy terms or conditions you qualify it with might all too easily come straight round to the front of the argument and get in the way (as has clearly happened in this case).

Therefore there are indeed cases where to achieve indemnity, policy limits may not actually apply as I think has been mentioned several times by other posters.

It may have escaped your attention that I am seeking to interpret the policy wording in a way that provides the OP with full indemnity up to the policy limits. If you have a better suggestion please go ahead.

My ACII is long behind me but i am perfectly comfortable with my understanding of indemnity - by all means please set out yours for the OP's benefit.