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Cash settlement decision

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Hi, I'm currently going through a house insurance claim following water damage to my bathroom which involved a burst pipe damaging the bathroom units. The insurance company asked me to obtain a quote and they would also send someone to my house to do an assessment. The local company who I chose quoted a figure of £1894.80 including VAT. However the insurance has now said that their contractor submitted 'a much lower quote' although they haven't told me what that is exactly. They are now saying that they are willing to offer me £900 (minus my excess obviously). I've never been through this process before and would be grateful to hear whether you think this is a fair offer (considering it is 50% less than my contractor's quote) or is it worth refusing to see if they will increase their offer, and if so, how would I go about this. Any advice would be great!!

Comments

  • FutureGirl
    FutureGirl Posts: 1,252 Forumite
    Eighth Anniversary 1,000 Posts Combo Breaker
    The cash settlement they have offered you is how much it would have cost the insurers contractors to do the work, as they do get discounts.

    They won't come back with an increased 'offer'. I'm sure if you read the policy booklet it'll state that where they can carry out repair, but cash is taken instead, the cash settlement will be discounted and will be no more than the cost it would have cost their suppliers to carry out the work.

    Assuming your excess is the compulsory EOW excess of £350, it means they are saying their contractors can do the work for £1250, whereas your contractor will do the same work for £1894.80. About a third different and a standard discounted amount.

    I would be asking the insurers if their contractors can do the works if you're concerned about costs.
  • isadora127
    isadora127 Posts: 35 Forumite
    Sixth Anniversary 10 Posts Name Dropper Combo Breaker
    Thanks for your reply. They are offering me £900 and then minus the excess of £350 that would leave me with £550. If it's a fair offer then that's okay but never having been through this process before I'm just wondering whether it's worth challenging.
  • Quentin
    Quentin Posts: 40,405 Forumite
    Their offer represents the ex vat cost.

    Even had they agreed to your contractor's quote they would not have given you the VAT inclusive amount quoted. The ex VAT price was the best you would have been offered (£1579 less your excess)

    Now they have the cheaper quote they are unlikely to negotiate a higher price, but there is no harm in trying!

    Or you can change your mind and have the job done (by their contractor)
  • isadora127
    isadora127 Posts: 35 Forumite
    Sixth Anniversary 10 Posts Name Dropper Combo Breaker
    Thanks for your help :)
  • TSx
    TSx Posts: 866 Forumite
    Part of the Furniture 500 Posts Name Dropper Combo Breaker
    If your contractor is VAT registered they should include the VAT figure on top.
  • Quentin
    Quentin Posts: 40,405 Forumite
    TSx wrote: »
    If your contractor is VAT registered they should include the VAT figure on top.
    Not for a cash in lieu deal. (They will pay you any VAT held back if you get the job done and subsequently provide a VAT invoice/receipt)

    In any case the OP's contractor's quote has been undercut!
  • stator
    stator Posts: 7,441 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    Get their contractor to do the work. Then when you find the faults you can get the insurance company to repair his bodge job. If you take the cash you won't be able to find a decent contractor to do the work for such a low price and you will be out of pocket.
    Changing the world, one sarcastic comment at a time.
  • magpiecottage
    magpiecottage Posts: 9,241 Forumite
    1,000 Posts Combo Breaker
    stator wrote: »
    Get their contractor to do the work. Then when you find the faults you can get the insurance company to repair his bodge job. If you take the cash you won't be able to find a decent contractor to do the work for such a low price and you will be out of pocket.
    Absolutely.

    If you use the insurer's contractor, the insurance company is responsible for the work. If they do not do it properly and the insurance company does not resolve it then you can take the insurer to the Financial Ombudsman Service.

    If your own contractor messes up, you are on your own.

    In addition, contractors have a habit of disappearing on other jobs without finishing. It is less likely that will happen if they are being pressured by an insurance company who know that they could fall foul of FOS.
  • xMonsoonx
    xMonsoonx Posts: 178 Forumite
    Absolutely.

    If you use the insurer's contractor, the insurance company is responsible for the work. If they do not do it properly and the insurance company does not resolve it then you can take the insurer to the Financial Ombudsman Service.

    If your own contractor messes up, you are on your own.

    Very good point.

    You could ask them for a scope of works to discuss with your contractor, that way you will know what works are being covered by your policy.
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