Home Insurance Claim - Cash Settlement

Lulabelle_Angelpie

Hi All,
I'm a newbie to these forums & in need of some advice please!
My mum is trying to claim for some jewellery which was stolen from her house in a burglary a couple of months ago. Having been burgled once before several years ago & had jewellery taken then, she has decided that getting vouchers to replace it is not what she wants to do this time round!
Tesco (her insurer) have offered a cash settlement instead but have deducted 20% of the valuation of the jewellery from the cash sum.
So basically she is left with a choice of £3280 cash or £4100 of vouchers.
My question is, are Tesco allowed to do this?
I thought that I had read somewhere (& I can't remember where) that the Financial Ombudsman has said this is unfair practise.......
Is anyone out there got any previous experience of this or can offer any guidance?
Many Thanks in Advance,
Lulabelle

FlameCloud

In a word, yes. (Provided that they can replace the jewellery themselves)

If they can, they would get a discount from their supplier. If you want a cash settlement, then it is only fair you get less, although I doubt you'd agree!

mattymoo

Summary of Financial Ombudsman views.

[FONT=Verdana, Arial, Helvetica, sans-serif]Policyholders should be allowed to choose where they purchase a replacement and they are entitled to a cash settlement if they cannot find an acceptable alternative. In such circumstances, we would not regard it as reasonable for the insurer to make a deduction from the cash settlement to represent any discount it would have got if the policyholder had bought a replacement from one of the insurer’s nominated suppliers. Nor would it necessarily be appropriate for the insurer to offer vouchers to the policyholder. If the option of replacement is not available, then the only way in which the insurer can indemnify a claimant is by a cash settlement. [/FONT]

[FONT=Verdana, Arial, Helvetica, sans-serif]In some cases, policyholders may not wish to purchase a replacement for the damaged or stolen goods. This may be, for example, because their circumstances have changed, or the object had sentimental value. Where this is the case, we will normally ask the insurer to agree a cash settlement. [/FONT]

http://www.financial-ombudsman.org.uk/publications/ombudsman-news/10/oct-repair-replace-cash.htm is the link to the full article lulabelle, October 2001 edition of ombudsman news.

Lulabelle_Angelpie

Thanks for this Mattymoo. I think this is the wording I have seen before but couldn't remember where! I'll pass it on to my mum & see whether quoting it at Tesco makes any difference whatsoever.

Lulabelle.

FlameCloud

Note that it only applies if they cannot replace the item themselves.

Lulabelle_Angelpie

Thanks Flamecloud. In this case, some of the items could be replaced as she was given vouchers to replace items stolen in a burglary a few years ago & it is some of these items which were taken on this occasion. However, there are some items which are of "sentimental value" & therefore I would say are irreplaceable. I think there is scope for a bit of negotiation on this basis - if it doesn't do any good then so be it, but its got to be worth a go!