Undervalued rebuild cost so insurers ratioing payout

MH1927

Percentage reductions are covered in the Consumer Insurance (Disclosure and Representations) Act 2012, generally legislation dosent need to be mentioned within a contract for it to apply.

naedanger

MH1927 said:

Percentage reductions are covered in the Consumer Insurance (Disclosure and Representations) Act 2012, generally legislation dosent need to be mentioned within a contract for it to apply.

The Financial Ombudsman Service does not just rely on the legal position. And they have stated (in the link given earlier in this thread), "We’ll usually decide it’s reasonable for you to apply the average clause if the customer was:

• asked to confirm the total replacement or rebuild cost
• given clear guidance on how to calculate those figures
• clearly told about the consequences of providing incorrect figures
  

If the consequences weren’t clearly explained and highlighted, we’re unlikely to decide that it was fair for you to rely on the average clause. [My emphasis.] But you could rely on the sum insured as a total limit or on specific limits if these were clearly pointed out. [And I don't think op's claim exceeds the total sum assured or any specific limit.]"

Obviously I cannot comment on whether or not the op's policy does clearly explain and highlight the consequences of underestimating the rebuild costs.

theoretica

Dips said:

daveyjp said:

What total gross external floor area has she calculated?

282 m2 I think 

Really?  I pulled these three at random from rightmove and they are all smaller - including cellars.  Worth checking.

229 m2 https://www.rightmove.co.uk/property-for-sale/property-85721170.html

136 m2 https://www.rightmove.co.uk/property-for-sale/property-86015902.html

128 m2 https://www.rightmove.co.uk/property-for-sale/property-86195746.html

MH1927

DRN 7820678
DRN 2763620

The first two decisions regarding averaging fire claims on a quick search followed CIDRA. The OP would better off focusing on the accuracy of the questions asked at policy inception. The case study relating to a building fire in your link is much more likely to get a positive outcome, a good example (Although it was a flood) would be DRN 4727672.

Dips

naedanger said:

Dips said:

naedanger said:

Dips said:

Good read that link. 

The insurance was taken out over the phone and I wasn’t given any guidance how to work out the rebuild cost. Half a leg to stand on maybe?

From the link there does seem to be possible avenues to explore.

You need to go through the documentation that was sent to you at the point of sale. (And perhaps try to get a copy of the telephone call.)

Is it clear from the point of sale documentation (and/or call) that claims could be reduced if you had underestimated the rebuild cost? 

Was any guidance given on how you should calculate the rebuild cost or what the rebuild cost should cover?

If no guidance was given on how to calculate the rebuild cost and/or the policy documentation does not make clear claims would be reduced in the event you had underestimated the rebuild cost then I think a complaint might have a reasonable chance of success.

Couldn't find any reference to estimating the rebuild costs in the policy wording. No documentation was sent before I paid. No guidance on how to calculate rebuild cost whilst we were filling the details in on the phone. Should I be complaining about this to the loss adjustor, my brokers, or the underwriters?

The brokers called today after hearing about the difference in rebuild cost:my value and asked if I wanted to pay the extra money it would cost to cover the building at the more expensive rebuild cost. Obviously I paid.

Not the loss adjuster - you are not their client.
Where do you think the problem lies? Is the problem that the policy does not make clear all claims will be reduced if the rebuild cost has been underestimated? Or is the problem that the policy does not actually make clear what the rebuild cost is supposed to cover? Or is the problem the rebuild cost has been overestimated by the loss adjuster? For any of those problems I would complain to the insurer.

If you believe the broker did not sufficiently bring your attention to key features of the policy, or how questions should be answered, then complain to them.

I suspect you could also submit one complaint to both if you think both have some liability and see if either offer any solution. And if appropriate and necessary escalate to the Financial Ombudsman and let them allocate liability, if any, between the insurer and broker.

I think the issue lies with the broker not giving me any guidance on the rebuild cost and the consequences. 

Can I start my claim and continue with a complaint at the same time so the kitchen can't start to be rebuilt? Would a complaint being filed harm the payout I will be offered or hinder communications?

Dips

MH1927 said:

DRN 7820678
DRN 2763620

The first two decisions regarding averaging fire claims on a quick search followed CIDRA. The OP would better off focusing on the accuracy of the questions asked at policy inception. The case study relating to a building fire in your link is much more likely to get a positive outcome, a good example (Although it was a flood) would be DRN 4727672.

Where would I look up these case numbers?

Dips

MH1927 said:

DRN 7820678
DRN 2763620

The first two decisions regarding averaging fire claims on a quick search followed CIDRA. The OP would better off focusing on the accuracy of the questions asked at policy inception. The case study relating to a building fire in your link is much more likely to get a positive outcome, a good example (Although it was a flood) would be DRN 4727672.

Where are these case numbers from?

Annemos

Can you find them through this? 
https://www.financial-ombudsman.org.uk/decisions-case-studies/ombudsman-decisions

Annemos

Type  DRN4727672   in the Keyword/Product entry
These are Ombudsman case decisions

Annemos

That takes you to this..... 
https://www.financial-ombudsman.org.uk/files/120329/DRN4727672.pdf