Undervalued rebuild cost so insurers ratioing payout

naedanger

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. 

Personally I don't see how the fact the broker did not give you a rough figure for the rebuild cost helps your case. I think it might be helpful to elaborate on that point in your actual complaint since it isn't obvious (at least to me).

Dips

naedanger said:

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. 

Personally I don't see how the fact the broker did not give you a rough figure for the rebuild cost helps your case. I think it might be helpful to elaborate on that point in your actual complaint since it isn't obvious (at least to me).

https://www.financial-ombudsman.org.uk/businesses/complaints-deal/insurance/home-buildings-insurance/underinsurance-home-insurance-complaints

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

They probably mean in their policy wording? But over the phone I wasn't given clear guidance how to calculate those figures or told the consequences of providing incorrect figures.

naedanger

Dips said:

naedanger said:

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. 

Personally I don't see how the fact the broker did not give you a rough figure for the rebuild cost helps your case. I think it might be helpful to elaborate on that point in your actual complaint since it isn't obvious (at least to me).

https://www.financial-ombudsman.org.uk/businesses/complaints-deal/insurance/home-buildings-insurance/underinsurance-home-insurance-complaints

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

They probably mean in their policy wording? But over the phone I wasn't given clear guidance how to calculate those figures or told the consequences of providing incorrect figures.

It may just be me, but I still don't see how the three bullet points you have listed, would lead you to expect the broker to give you a rough rebuild cost.

Personally I think you would be better just saying what you said in your earlier posts, namely you thought at the time the rebuild cost would be a bit less than the market value. [You could add that you now realise that this assumption was not correct but at the time you thought it just another one of many straightforward questions and didn't realise it needed much thought, and indeed a detailed calculation to come up with a reasonable estimate. And perhaps further add that you feel you should have been (a) warned this figure could be significanly higher than the market and (b) told how the rebuild figure should in fact be estimated. And that you believe without these prompts the broker was assuming too much from customers who had not previously come across the distinction between market and rebuild value.]

Dips

naedanger said:

Dips said:

naedanger said:

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. 

Personally I don't see how the fact the broker did not give you a rough figure for the rebuild cost helps your case. I think it might be helpful to elaborate on that point in your actual complaint since it isn't obvious (at least to me).

https://www.financial-ombudsman.org.uk/businesses/complaints-deal/insurance/home-buildings-insurance/underinsurance-home-insurance-complaints

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

They probably mean in their policy wording? But over the phone I wasn't given clear guidance how to calculate those figures or told the consequences of providing incorrect figures.

It may just be me, but I still don't see how the three bullet points you have listed, would lead you to expect the broker to give you a rough rebuild cost.

Personally I think you would be better just saying what you said in your earlier posts, namely you thought at the time the rebuild cost would be a bit less than the market value. [You could add that you now realise that this assumption was not correct but at the time you thought it just another one of many straightforward questions and didn't realise it needed much thought, and indeed a detailed calculation to come up with a reasonable estimate. And perhaps further add that you feel you should have been (a) warned this figure could be significanly higher than the market and (b) told how the rebuild figure should in fact be estimated. And that you believe without these prompts the broker was assuming too much from customers who had not previously come across the distinction between market and rebuild value.]

That's great wording thank you. I'll get that written up and sent to both the brokers and underwriters complaints department

Dips

Back again. 

So I gave them one quote and they agreed to it at the ratio'd amount. But since then I've found another kitchen I prefer. It's more expensive as it's a nationwide firm and not just a local tradesmen. Because the nationwide firm only fits the kitchen and doesnt do plastering etc it's working out more expensive. The adjustor says the first quote is more competitive so wants to pay out at that amount. Is there anything I can say to sway them?

Mickey666

This sort of things is outrageous and tantamount to fraud.
The OP has paid premiums for a policy valued to pay out £190k and should therefore be able to claim up to that amount.  If their house was totally destroyed and cost, says, £300k to rebuild then that would be the OP’s problem but the policy should still pay out £190k.
If insurance companies want to play this ‘under-insured’ card (which I know they frequently do) then it is completely unfair to expect their lay customers to have the knowledge and expertise to know about technical things such as property rebuilding costs.  Insurance companies are quick to point out under-insurance when it comes to claims but offer no help to correctly value the policy in the first place.  THEY are the insurance experts, not the customer.  It’s a mis-selling scam!

dunstonh

The OP has paid premiums for a policy valued to pay out £190k and should therefore be able to claim up to that amount.  If their house was totally destroyed and cost, says, £300k to rebuild then that would be the OP’s problem but the policy should still pay out £190k.

Or another way of looking at it is that the OP has chosen to only insured to 63% of the value.

If insurance companies want to play this ‘under-insured’ card (which I know they frequently do) then it is completely unfair to expect their lay customers to have the knowledge and expertise to know about technical things such as property rebuilding costs.

Which is why most policies nowadays don't ask the sum insured but will automatically set a blanket limit.

For those that have to use old style sum insured policies, myself included, or choose to use them, then there is a reasonable tolerance applied.    If you use the rebuild value on a mortgage valuation report or survey then most insurers will accept that even if it turns out to be wrong.

 It’s a mis-selling scam!

Not really.  If you buy a policy without advice and make the decisions yourself. then you are the one that is responsible for your DIY.  The FOS have a position on this, as already covered in this thread.    So, if those points were covered and the person still went ahead with that cover then it is their responsibility.   If those points were not covered then the FOS would generally side with the consumer.

The OP says the broker didn't follow that and will make a complaint.   So, an independent arbiter that is generally slightly consumer biased in terms of fairness can look at it if the broker rejects the complaint.

Mickey666

dunstonh said:

The OP has paid premiums for a policy valued to pay out £190k and should therefore be able to claim up to that amount.  If their house was totally destroyed and cost, says, £300k to rebuild then that would be the OP’s problem but the policy should still pay out £190k.

Or another way of looking at it is that the OP has chosen to only insured to 63% of the value.

If insurance companies want to play this ‘under-insured’ card (which I know they frequently do) then it is completely unfair to expect their lay customers to have the knowledge and expertise to know about technical things such as property rebuilding costs.

Which is why most policies nowadays don't ask the sum insured but will automatically set a blanket limit.

For those that have to use old style sum insured policies, myself included, or choose to use them, then there is a reasonable tolerance applied.    If you use the rebuild value on a mortgage valuation report or survey then most insurers will accept that even if it turns out to be wrong.

 It’s a mis-selling scam!

Not really.  If you buy a policy without advice and make the decisions yourself. then you are the one that is responsible for your DIY.  The FOS have a position on this, as already covered in this thread.    So, if those points were covered and the person still went ahead with that cover then it is their responsibility.   If those points were not covered then the FOS would generally side with the consumer.

The OP says the broker didn't follow that and will make a complaint.   So, an independent arbiter that is generally slightly consumer biased in terms of fairness can look at it if the broker rejects the complaint.

Well the OP’s insurer doesn’t seem to be applying a reasonable tolerance.  £200k vs £190k is only 5% so it seems they are being very harsh.  Perhaps the OP should name and shame so we’ll all forewarned about their sharp practice when it comes to claims.

I fully accept that market value is not necessarily related to rebuild value.  My previous house rebuild cost was less than 1/2 the market value but my current house rebuild cost is about 2x the market value, mainly because it is listed.  At least that’s a professional valuation so I’d hopefully have a case to argue should the worst happen, but how many people get a professional valuation of their rebuild costs for insurance purposes?

dunstonh

seems they are being very harsh.  Perhaps the OP should name and shame so we’ll all forewarned about their sharp practice when it comes to claims.

A 5% difference is not reasonable and expectation would be the that FOS will pick them up on that.    

At least that’s a professional valuation so I’d hopefully have a case to argue should the worst happen, but how many people get a professional valuation of their rebuild costs for insurance purposes?

Typically when they buy the house.    That should give them the sum insured to use from the outset.   Insurers will accept that value (as would the FOS).   Annual indexation takes care of it thereafter.

If a broker providing an advised service was used, you do have to ask why a sum insured policy was used and not a bedroom rated policy.  There could be a good reason (thatched property, unusual build, significant outbuildings etc) but I would estimate that 2/3ds of properties are best on bedroom rated plans.

Weighty1

Mickey666 said:

dunstonh said:

The OP has paid premiums for a policy valued to pay out £190k and should therefore be able to claim up to that amount.  If their house was totally destroyed and cost, says, £300k to rebuild then that would be the OP’s problem but the policy should still pay out £190k.

Or another way of looking at it is that the OP has chosen to only insured to 63% of the value.

If insurance companies want to play this ‘under-insured’ card (which I know they frequently do) then it is completely unfair to expect their lay customers to have the knowledge and expertise to know about technical things such as property rebuilding costs.

Which is why most policies nowadays don't ask the sum insured but will automatically set a blanket limit.

For those that have to use old style sum insured policies, myself included, or choose to use them, then there is a reasonable tolerance applied.    If you use the rebuild value on a mortgage valuation report or survey then most insurers will accept that even if it turns out to be wrong.

 It’s a mis-selling scam!

Not really.  If you buy a policy without advice and make the decisions yourself. then you are the one that is responsible for your DIY.  The FOS have a position on this, as already covered in this thread.    So, if those points were covered and the person still went ahead with that cover then it is their responsibility.   If those points were not covered then the FOS would generally side with the consumer.

The OP says the broker didn't follow that and will make a complaint.   So, an independent arbiter that is generally slightly consumer biased in terms of fairness can look at it if the broker rejects the complaint.

Well the OP’s insurer doesn’t seem to be applying a reasonable tolerance.  £200k vs £190k is only 5% so it seems they are being very harsh.  Perhaps the OP should name and shame so we’ll all forewarned about their sharp practice when it comes to claims.

I fully accept that market value is not necessarily related to rebuild value.  My previous house rebuild cost was less than 1/2 the market value but my current house rebuild cost is about 2x the market value, mainly because it is listed.  At least that’s a professional valuation so I’d hopefully have a case to argue should the worst happen, but how many people get a professional valuation of their rebuild costs for insurance purposes?

You've read the wrong part.  The OP stated £190k rebuild cost on a house worth £200k but based on the square footage of the property, as it states later in the thread, the rebuild cost should have been £350-400k.  If the shortfall was only 5% then the insurer would likely have swallowed that but NOT when the rebuild cost insured is less than half what it should have been.