Insurance claim: can we find a cheaper item after payout?

FlyingSquirrel2

Specifically related to household insurance - we have a named item on our policy (an electric bike) and just had our second battery theft this year. We had a battle to get the insurer to pay out last time as they tried to argue that it was an accessory and therefore not covered, but we did manage it eventually, albeit with a hefty excess (which I guess I had agreed to when we got the quote 😜).
my question is: if the insurer pays us the value of a replacement and then we manage to get one cheaper (second hand or from Europe), is this fraudulent? Or totally ok?  We wouldn’t of course do this if it’s in any way dishonest, but is the insurer covering the cost of what you originally had, or paying for the replacement? 

(Makes me wonder if you got a payout for something but decided not to replace it but to use the money got something else instead is that allowed…though this isn’t the case for us but seems like the other side of the same coin).

DullGreyGuy

FlyingSquirrel2 said:

my question is: if the insurer pays us the value of a replacement and then we manage to get one cheaper (second hand or from Europe), is this fraudulent? Or totally ok?  We wouldn’t of course do this if it’s in any way dishonest, but is the insurer covering the cost of what you originally had, or paying for the replacement? 

(Makes me wonder if you got a payout for something but decided not to replace it but to use the money got something else instead is that allowed…though this isn’t the case for us but seems like the other side of the same coin).

An insurer is simply settling the loss as outlined in the policybook. This will say if its new for old or indemnity, if they will use approved suppliers, vouchers or cash, how they will value things that are no longer made etc if new for old. They then discharge their liability by doing this.

When an insurer has a preferred supplier for whatever you've lost/broke then normally a cash settlement will be reduced to represent the corporate discount they get from their supplier if you insist on cash.

What you do with the cash is totally up to you, your under no obligation to replace the bike and can invest it, spend it on a new TV, a holiday, give it to charity whatever... its your money. 

user1977

What's made you think you need to use the cash to buy a replacement?

DullGreyGuy

user1977 said:

What's made you think you need to use the cash to buy a replacement?

Its a fairly common question, people read the policybook and it says the insurer will replace the item and somewhat assume that could mean the cash has to be used for the same.

The slightly more common complaint is when someone has £30,000 of jewelry stolen and they get sent a giftcard for £29,800 for Beaverbrooks or Goldsmiths and they say they dont want to replace the items as they were sentimental and so the insurer offers £18,800 as a cash settlement