Should I accept lower cash settlement?

Mrs_Stigler

Hi, unfortunately we was burgled recently & the Insurance company has valued the missing items @ just under £5,000. They want me to accept gift vouchers to that amount or they will deduct 42% for a cash settlement. Does anyone know if that is correct?
Some of the items where more sentimental anyway so what would be the point of replacing.
Thank you for help with this

TSx

You could always ask for part cash settlement, part vouchers and replace the items you were wanting to replace. Insurers get a large discount on certain items when they bulk buy from certain places (jewellery usually gets the biggest discount). The financial ombudsman usually considers this to be fair.

Mrs_Stigler

Thank you. It was all jewellery that was stolen, so I have requested £1,000 in vouchers but they are still saying they will deduct the percentage for the rest of the cash settlement.

Quentin

They are acting correctly.


Maybe you can get vouchers for the full amount of the claim and sell them on ebay for more than accepting cash from the insurer?

silvercar

The ombudsman has ruled on this. Full ruling here:

http://www.financial-ombudsman.org.uk/publications/ombudsman-news/92/92-insurance-claims.html

Important bit:

If, for example, the item concerned is jewellery that is antique or specially-commissioned, then we are likely to conclude that it would be unfair for the insurer to insist on the policyholder buying a modern substitute from a major high-street retailer. In such cases, we usually conclude that policyholders should be allowed to choose where they purchase a replacement and are entitled to a cash settlement (without the deduction of any discount) if they are unable to find an acceptable replacement.

Scroll down for examples eg 92/1.

Mrs_Stigler

Thanks for the information, just feels like I am been stolen off twice! & I just can't imagine spending all that money on jewellery, expecially in a short period of time.

[Deleted User]

You could always ask for replacement jewellery and then eBay it. Some items go for more than the new price on there. Chances are if you make a bit of an effort you could do better than the cash offer.

Parking_Trouble

Had a long dispute when we claimed for wife's antique ring which was lost. The pathetic offer of high street vouchers was pointless and the reduction in cash annoying. Didn't accept the voucher (absolutely nothing of interest in the store)

Eventually we had a replica of the ring made.

There is a huge mark up in retail jewellery hence the reluctance of insurers to pay out in cash.

My advice is to decide what you really want and negotiate.

HHarry

A 42% reduction does seem very high. When we were burgaled last year we were paid out in full for too antique watches which weren't easy to replace, and then offered vouchers, reduced cash or replacement for the less 'exotic' items (including an antique ring)

We took the reduced cash option, but I think it was only 10%.

TSx

HHarry wrote: »

A 42% reduction does seem very high. When we were burgaled last year we were paid out in full for too antique watches which weren't easy to replace, and then offered vouchers, reduced cash or replacement for the less 'exotic' items (including an antique ring)

We took the reduced cash option, but I think it was only 10%.

It will depend on the type of jeweller - e.g an insurer will likely have specialist suppliers for asian or custom jewellery as well as a high street supplier. 42% is high, but certainly not out of the realms of possibility (jewellers really do have a very high profit margin). For comparison, on carpets, you tend to be looking at 10-20% discount, and electricals 0-10% discount because the profit margin in those areas is so low.

If you find somewhere that you can buy the jewellery from, ask for a discount. Back when I was handling claims, I'd often ask jewellers for a discount (using the very simple psychology of "we can get the jewellery for £x - if you can match that, I'll make the cheque out to you"). There's no reason they wouldn't give you a discount if it means they'll get the business and understand why you're asking for one.

Sometimes these discounts will benefit the policyholder - mainly if your underinsured. I've had many occasions where we've had a happy policyholder because they have a limit of £5000 but we can offer them £7500 or so in vouchers because we can give them the benefit of our discount.

Finally in terms of being robbed twice - remember that insurance is a contract of indemnity, it's specific purpose is to put you back in the same position you were prior to the loss. Before the loss, you had a pile of jewellery, and that's what the insurance company can do for you - you didn't have a pile of cash, so why should they pay out more just so you can?