Undervalued rebuild cost so insurers ratioing payout

Mickey666

Weighty1 said:

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.

Ah, I see.  My mistake, thanks for the correction.  TBH I couldn’t see why 5% would be an issue but getting on for 50% is a different matter.

Dips

Dips said:

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?

Anyone?

I'll name them if people are interested after I've been paid

Sandtree

The only argument is if you found something materially wrong with the first suppliers but even then its a 50/50 given they were your choice in the first place. 

You will be paid market rate for your area and if you then want to add more of your own money to it to get a national name etc you are free to do so.

naedanger

Dips said:

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?

No, I don't think so. You would need to show that the first option was, overall, inferior to the kitchen that was destroyed and that the new kitchen wasn't materially better than the destroyed kitchen. Even then many (most?) policies won't give the customer the choice of supplier. (Nationwide companies are often more expensive for the same/similar product and naturally insurers don't want to spend more than necessary.)

For what it is worth some nationwide kitchen firms don't have a good reputation, and I generally prefer local tradesman (provided they have a proper business e.g. well established with business premises and proper contact details etc). 

Dips

Arghh. That's rather annoying but thanks everyone