Undervalued rebuild cost so insurers ratioing payout

naedanger

You can also use the link to search for similar cases to your own e.g. by entering "rebuild underinsured" or "rebuild averaging" etc. And you can further search for upheld vs not upheld decisions. Looking at various decisions you should get some idea of what FOS look at when deciding whether or not the customer has a legitimate complaint when cover is reduced for underinsurance.

naedanger

Dips said:

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?

Yes you can start your claim and the complaint at the same time. I don't think a complaint should in theory hinder the payout on offer but I don't know whether it would in practice. 

Personally I think it is best to raise a complaint as soon as possible. The sooner it is raised the easier it will be for the other party to deal with it.

JGB1955

That's a massive house - we live in a 4 bed, 2 bathroom detached house (admittedly 1980's... sorry...) and it comes in at 147 square metres.  73.5 on each floor.  We have a detached double garage and brick built walls around our garden, so add £20K on to the valuation.  Is your house really that huge?  Rebuild cost £233K.  Identical houses currently selling for £385+K.

Dips

Annemos said:

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

Thanks. 

That one doesn't bode too well for me 

"I then contacted both parties and explained that AXA’s role in this complaint was indeed limited to the operation of the policy and didn’t extend to any information that Mr T was provided by the broker. So, the crucial issue was the actual rebuild cost of Mr T’s property."

The rebuild figure by the adjustor is near enough on mine. Mine hinges on whether the broker gave me the info prior to getting the insurance, and then would the ombudsman even be able to do anything with the underwriters due to that it not being their issue?

Dips

JGB1955 said:

That's a massive house - we live in a 4 bed, 2 bathroom detached house (admittedly 1980's... sorry...) and it comes in at 147 square metres.  73.5 on each floor.  We have a detached double garage and brick built walls around our garden, so add £20K on to the valuation.  Is your house really that huge?  Rebuild cost £233K.  Identical houses currently selling for £385+K.

Yeah it's a couple of properties joined together with attics and extension lol

Dips

naedanger said:

Dips said:

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?

Yes you can start your claim and the complaint at the same time. I don't think a complaint should in theory hinder the payout on offer but I don't know whether it would in practice. 

Personally I think it is best to raise a complaint as soon as possible. The sooner it is raised the easier it will be for the other party to deal with it.

Anyone else for any thoughts on this? 

dunstonh

Dips said:

naedanger said:

Dips said:

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?

Yes you can start your claim and the complaint at the same time. I don't think a complaint should in theory hinder the payout on offer but I don't know whether it would in practice. 

Personally I think it is best to raise a complaint as soon as possible. The sooner it is raised the easier it will be for the other party to deal with it.

Anyone else for any thoughts on this? 

Raising the complaint will have no impact on the claims process.  They will deal with the claim as they plan to until they are told differently (in respect of the scale of payout.

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

You are quite right to make the complaint as its really your only choice.  However, did you ask for guidance from the broker?  Was it actually a broker you spoke to and not a call centre worker operating on a non-advised basis?
If you bypass the advice route to save pennies on the premiums then you take on some of that responsibility for knowing what you are doing.  Only key facts then need to be disclosed.       Personally, we only ever use automatic sum insureds (up to £xxx style) policies as it removes the risk in scenarios like this.   Maybe useful for others reading who can avoid a similar scenario.

Sandtree

Dips said:

The rebuild figure by the adjustor is near enough on mine. Mine hinges on whether the broker gave me the info prior to getting the insurance, and then would the ombudsman even be able to do anything with the underwriters due to that it not being their issue?

You need to ensure your complaint is to the right party then... if you feel its the brokers fault then your complaint needs to be with the broker rather than the insurer (though in pactice probably complain to both initially)

If the broker has been negligent then the FOS can make them pay appropriate compensation and they undoubtably will have Professional Indemnity Insurance to cover such issues. 

However... was it an advised or unadvised sale? Brokers can be either and most these days are non-advised. Is your issue that they didnt explain what rebuild cost meant or that the consequences of getting it wrong werent explained? Sorry if you’ve said already but was this a telephone or online sale? Did you actually ask any Qs about the rebuild value or simply just gave a value as the answer to the Q?

Dips

Sandtree said:

Dips said:

The rebuild figure by the adjustor is near enough on mine. Mine hinges on whether the broker gave me the info prior to getting the insurance, and then would the ombudsman even be able to do anything with the underwriters due to that it not being their issue?

You need to ensure your complaint is to the right party then... if you feel its the brokers fault then your complaint needs to be with the broker rather than the insurer (though in pactice probably complain to both initially)

If the broker has been negligent then the FOS can make them pay appropriate compensation and they undoubtably will have Professional Indemnity Insurance to cover such issues. 

However... was it an advised or unadvised sale? Brokers can be either and most these days are non-advised. Is your issue that they didnt explain what rebuild cost meant or that the consequences of getting it wrong werent explained? Sorry if you’ve said already but was this a telephone or online sale? Did you actually ask any Qs about the rebuild value or simply just gave a value as the answer to the Q?

Unadvised sale I believe. My issue is that the consequences of getting the rebuild cost weren't explained and a rough figure for the rebuild wasn't given as you sometimes get on online forms for home insurance. It was a telephone sale. I just gave the value. 

Sandtree

Dips said:

Sandtree said:

Dips said:

The rebuild figure by the adjustor is near enough on mine. Mine hinges on whether the broker gave me the info prior to getting the insurance, and then would the ombudsman even be able to do anything with the underwriters due to that it not being their issue?

You need to ensure your complaint is to the right party then... if you feel its the brokers fault then your complaint needs to be with the broker rather than the insurer (though in pactice probably complain to both initially)

If the broker has been negligent then the FOS can make them pay appropriate compensation and they undoubtably will have Professional Indemnity Insurance to cover such issues. 

However... was it an advised or unadvised sale? Brokers can be either and most these days are non-advised. Is your issue that they didnt explain what rebuild cost meant or that the consequences of getting it wrong werent explained? Sorry if you’ve said already but was this a telephone or online sale? Did you actually ask any Qs about the rebuild value or simply just gave a value as the answer to the Q?

Unadvised sale I believe. My issue is that the consequences of getting the rebuild cost weren't explained and a rough figure for the rebuild wasn't given as you sometimes get on online forms for home insurance. It was a telephone sale. I just gave the value. 

Ultimately you have nothing to lose with lodging a complaint but I would say to prepare yourself for an unfavourable answer.

There will almost certainly be a call script where there is a statement that you must answer all questions accurately and to the best of your knowledge and failing to do so may invalidate your insurance etc. The issue here is that whilst you may have answered it to the best of your knowledge you have not answered it accurately. In this case the consequence is less dramatic than invalidating your insurance as the broker warned you about but means they are applying averaging which used to be common in policy wordings but is now also enshrined in law.

However.... how you calculate the percentage to be applied can differ... policy wordings often say its a proportion of the limit... so if you paid for a £150,000 limit and needed a £300,000 limit they will pay 50% because you only insured half the value but from memory the law that others have referred to talks about the premium difference rather than the limit difference so if you paid £300 for your £150,000 limit and they would have charged you £400 for a £300,000 limit they have to pay 75% of the claim. 

Unfortunately, and unhelpfully for you, I don’t know if the policy states limits and the law states premiums which takes precedent. Does your policybook actually have a clause on averaging/under insurance?