Home and Contents Insurance Refusing Payout After Theft

jamesbenjamin

Hi all.  I would greatly appreciate some advice regarding a payout refusal on Home and Contents insurance after theft and subsequent damage of a pesonal item?

My sister took out Home and Contents insurance with 'Paymentshield' 9 years ago.  When arranging the cover over the phone my sister specifically requested that her electric bike was covered, worth around £1500.  The call handler assured my sister this was to be covered under Personal Possessions part of the policy.  The only reason the policy was taken out with this provider was due to the electric bike being covered.

The policy was renewed each year. 
Mid March this year the electric bike was stolen from my sisters house using bolt cutters to break the security chain.  2 days later the bike was recovered from a group of teenagers who had totally trashed the bike.  The police gave a crime number and they know who took the bike.

After making a claim my sister was informed that Paymentshield would not be paying out.  This was due to the terms of the policy stating that 'Motorised pedal cycles' are NOT covered under the policy.

We have checked and it is clear in the T&C that it is indeed stated that 'Motorised pedal cycles' are NOT covered.

However this is very frustrating.  My sister specifically took the insurance because the call representative assured her that it was covered and my sister took this at face value.  Had she known that it wasn't covered the cover would never have been taken.

The implications are that there is no money to replace the electric bike making it much harder to get to work.  After 9 years of paying a policy that she was told (verbally) covered the bike the cover simply isn't there and never existed.

Do we have any recourse to raise this and request the payout or refund of the cost of insurance given that it was miss sold?  We are not optimistic as it is based on a phone conversation from 9 years ago but would greatly appreciate any advice given?

Thank you in advance for any advice that you can give.

HampshireH

I may have been covered 9 years ago but not in recent renewals?

Companies change their cover regularly in their terms and conditions and expect them to be read before renewal.

With e bikes becoming more and more popular (compared to 9 years ago) its possible they have updated theirs terms to exclude this?

SiliconChip

What she needs to do is find the policy documents for each of the 9 years that she held the policy to establish when the cover was removed, and in particular the first year to confirm whether it was covered at the point where she had the conversation with the insurer. If it wasn't then she might be able to make a case for misselling, although it's unlikely that recordings of the call would still exist after so long. But if it was covered and then the policy changed to exclude electric bikes then the fault is her's for not checking the policy on renewal, and she'll have no claim for either payout for the stolen bike or for premiums paid.

dunstonh

Companies change their cover regularly in their terms and conditions and expect them to be read before renewal.

With e bikes becoming more and more popular (compared to 9 years ago) its possible they have updated theirs terms to exclude this?

I believe that is what will have happened.   They never used to differentiate between e-bikes and pedal bikes but they changed that some years ago and explicitly state that they do not cover any form of e-bike.   

Paymentshield are pretty good at notifying changes at renewal.   However, it does rely on the policyholder reading it.

TELLIT01

Most policy renewal notices that I've had have wording to the effect that it is the customer's responsibility to confirm that the policy still meets their needs.

kingstreet

Looking back, the 27/02/2012 Paymentshield policy conditions makes no mention of motorised pedal cycles. I then have a 2019 Paymentshield policy booklet and by then motorised pedal cycles were excluded from Personal Possessions cover.

Sorry, I don't have those inbetween.

dunstonh

I have a March 2018 policy booklet and the motorised pedal cycle exclusion is in that. - Plan version is 7.

edit: Just found one from October 2013, version 5, and the exclusion is in that one.

jamesbenjamin

Thank you all for your replies.  Looks as though it is a no-go to challenge the none payment. 

Frustrating to know my sis paid into this for years thinking she was covered but wasn't.  Just shows, check your renewal terms n conditions.

Thanks again for the advice 

DullGreyGuy

There is a school of thought that there is never anything to lose by complaining that the change in the policy terms wasnt sufficiently well highlighted at the renewal however that is normally defended by the fact you are always instructed to read the policy to ensure it still meets your needs.

Home insurance is sold almost exclusively via non-advisory brokers and so its not their job to tell you if a policy is right or the best for you, they can only tell you its features/limits and its up to you to decide if it meets your demands and needs.

Aretnap

TELLIT01 said:

Most policy renewal notices that I've had have wording to the effect that it is the customer's responsibility to confirm that the policy still meets their needs.

This is true so far as it goes but it is not an absolute get-out for the insurer. If there are significant changes to the policy terms then the insurer has a responsibility to highlight them to the customer - it's not enough just to give the customer a 50 page document and expect them to play spot the difference.

For an example where the FOS upheld a complaint about a change in renewal terms which was not sufficiently clearly highlighted see here. Admittedly it was a bigger change than a tightening of what's classed as a pedal cycle.

https://www.financial-ombudsman.org.uk/decision/DRN8490006.pdf

So if the OP's sister's renewal letter said in big letters something like "please note that electric cycles are no longer covered as standard; please contact us if you require additional cover for them" and she just didn't read it then she's definitely out of luck. If the only way she was notified of the change was in a single line on page 67 of the policy documents then she at least has an arguable case. The immediate problem is that the change could have been made at any point in the last 9 years and it will be difficult to find out how it was communicated unless she kept all her renewal letters.

[Deleted User]

It's definitely worth raising a complaint and if that doesn't work going to the FOS. Costs you nothing.

As Aretnap says, it should have been highlighted. It's the "red hand rule", as in if it's that important it should be highlighted by a red hand pointing to it. From back in the days before they could easily do big fonts and bold text.