Insurance company trying to force us to use specific jewellers.

DataMonkeyAG

Hi all,
My wife lost a ring at the end of last year and we have claimed our contents insurance in order to allow her to get a replacement.  The insurance company (Admiral) has agreed to a payout amount but they are trying to force us to use a specific jewellers.  I don't remember seeing anything the in T&Cs about this.  We always use the same jewellery company and even the same person at the jewellers.
So my question is, are they allowed to do this?  Can they force us to use a specific jeweller?
Hope someone can help with this.
Thanks
Alex

Retired_Mortgage_Adviser

So have Admiral agreed a payout of XX and said that it must be spent at a particular establishment?

Retired_Mortgage_Adviser

This looks like the relevant section in the policy document -

How we will settle your claim - Contents

We will either pay to repair the item, restore the item (for example use professional cleaners for a carpet spillage), pay the cost of repairing it, replace the item as new, or make a payment up to the amount we could repair, restore or replace the item for after deducting any discount we would have received from our own suppliers.

I'm not sure which of the above would allow them to agree a fixed payout amount but insist that you use a particular jeweller.

DataMonkeyAG

Retired_Mortgage_Adviser said:

So have Admiral agreed a payout of XX and said that it must be spent at a particular establishment?

Yes they have agreed that the value of the ring is X and are saying we should use the jeweller they tell us to use. LMG jewellery in this case.  Who have said they will come out with a catalogue for us to choose from.  We're trying to fight it but wanted to see if we were legally able to fight it.

Retired_Mortgage_Adviser said:

This looks like the relevant section in the policy document -

How we will settle your claim - Contents

We will either pay to repair the item, restore the item (for example use professional cleaners for a carpet spillage), pay the cost of repairing it, replace the item as new, or make a payment up to the amount we could repair, restore or replace the item for after deducting any discount we would have received from our own suppliers.

I'm not sure which of the above would allow them to agree a fixed payout amount but insist that you use a particular jeweller.

Yeah, that's what I thought too.  I'm so confused.
Thanks
Alex

Retired_Mortgage_Adviser

Well if they have only agreed a value as opposed to saying that they will make a payment, the term which says "replace the item as new" could be taken to cover the arrangement suggested by them.

If you have exhausted informal discussions and continue to be unhappy with their proposal, step 1 would be to lodge a formal complaint (use MSE Resolver) with Admiral following by step 2 which is going to the Financial Ombudsman Service if not resolved.

Mind you, this will take a good few months as the FOS is currently overloaded with cases.

DataMonkeyAG

Retired_Mortgage_Adviser said:

Well if they have only agreed a value as opposed to saying that they will make a payment, the term which says "replace the item as new" could be taken to cover the arrangement suggested by them.

Sorry, they've agreed to a payout.  A rep from LMG called to arrange a time for someone to come out with a catalogue of their stock so that we could pick what we wanted.

Retired_Mortgage_Adviser

I meant agreed to "make a payment to you" which I don't think they have if they are saying you get to select a replacement from a catalogue for which they then pay the jeweller.

Aretnap

It would allow them to reduce the settlement to reflect the discount they get from their preferred supplier, were you to insist on a cash settlement. 

It's not unusual for insurers to settle with vouchers for a preferred supplier as they are in a position to negotiate large discounts, so ultimately it means cheaper insurance. IIRC the ombudsman's position is that this is fair so long as the supplier can actually supply an exact replacement ; if they can't then the insurer should offer a full cash alternative. If the preferred supplier can offer an exact replacement and you just prefer to use someone else it is fair for the insurer to reduce the cash payout to reflect the discount. 

paddyandstumpy

Retired_Mortgage_Adviser said:

This looks like the relevant section in the policy document -

How we will settle your claim - Contents

We will either pay to repair the item, restore the item (for example use professional cleaners for a carpet spillage), pay the cost of repairing it, replace the item as new, or make a payment up to the amount we could repair, restore or replace the item for after deducting any discount we would have received from our own suppliers.

I'm not sure which of the above would allow them to agree a fixed payout amount but insist that you use a particular jeweller.

Highlighted the pertinent part. 

Yes they can do this, as long as a suitable replacement can be sourced. 

tickledpinx

paddyandstumpy said:

Retired_Mortgage_Adviser said:

This looks like the relevant section in the policy document -

How we will settle your claim - Contents

We will either pay to repair the item, restore the item (for example use professional cleaners for a carpet spillage), pay the cost of repairing it, replace the item as new, or make a payment up to the amount we could repair, restore or replace the item for after deducting any discount we would have received from our own suppliers.

I'm not sure which of the above would allow them to agree a fixed payout amount but insist that you use a particular jeweller.

Highlighted the pertinent part. 

Yes they can do this, as long as a suitable replacement can be sourced. 

As long as a "suitable replacement" can be sourced. In the case items with an aesthetic value such as jewellery, unless we're talking about the exact same ring, what constitutes a suitable replacement can still be subjective and a point of disagreement between insurer and insured.

If, for instance, the item concerned is jewellery that is custom made, if this goes to a dispute, it is likely that the FOS could conclude that it would be unfair for the insurer to insist on the policyholder buying a substitute from a major high-street retailer and are entitled to a cash settlement (without the deduction of any discount) if they are unable to find an acceptable replacement.

OP, always remember that the Insurer's judgement isn't the final word on a matter of judgement. 

muhandis

It all depends on whether the replacement is reasonable. @DataMonkeyAG Is the ring custom made? Does the catalogue item offered by the Insurer's jeweller exactly match the lost ring? What is the difference in quotes between your jeweller and the insurer's?

Start the process by making a complaint to the Insurer. You don't have anything to lose. The current settlement will still be available even if you make a complaint and the ombudsman rules against you. The insurer will almost certainly reject your complaint, unless the ombudsman fee of 550 quid dwarfs the difference that they are arguing about. 

See the below ombudsman decision on a similar dispute (it may or may not be similar to your scenario) -

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Consumer complains about insurer’s proposal for replacing a specially commissioned item of jewellery

Mr C was very unhappy with his insurer’s response after he made a claim for a diamond ring that his wife had lost.

When he rang the insurer to report the loss, he explained that he had given his wife the ring several years earlier as an anniversary present. The ring had been specially commissioned from a local jeweller, who had designed and made it in his own workshop. 

The insurer confirmed that Mr C was covered for the loss of the ring – and it asked him to get a written quotation from the original jeweller for the cost of replacing it.

Mr C’s jeweller said it would cost £6,500 to make a replacement but that he would offer the insurer a 6.5% discount on that price. 

The insurer then obtained a quotation from its preferred firm of jewellers. This firm said that after applying a discount of 36% it could produce a ‘similar’ ring for £4,736. 

The insurer then told Mr C it would either replace the ring through its preferred jewellers or pay him a cash settlement of £4,736. 

Mr C did not think these options were fair. He said the ring had been a ‘one-off ’, so it seemed very unlikely that anyone other than the original jeweller could produce an acceptable replacement. And he did not consider it reasonable that he should be offered a cash settlement that was less than the amount the original jeweller would charge to provide a replacement.

The insurer did not accept Mr C’s complaint. It drew his attention to the terms of his policy, which said it would replace ‘personal belongings’ with new items obtained though its ‘specified network of suppliers’. Mr C then complained to us. 

Complaint upheld

We noted that the insurer’s preferred jeweller had said it could provide a diamond that was ‘identical’ to the one in the original ring. It undertook to provide a ‘similar band and setting’ but acknowledged that it would not be able to produce a ring that was exactly the same as the original.

We agreed with Mr C that the special nature of the ring meant that the insurer’s preferred jeweller could not provide a reasonable replacement.

We upheld the complaint and told the insurer to pay the full amount required by the original jeweller to make a replacement.