In home insurance, should 'brand new products' allow for refurbished replacements to be used?

MrBadgerEsq

I recently bought a new buildings and contents policy with a major household name company. The company's web site states that the policy is new for old with a detailed description of 'With our content cover, if your possessions are damaged, we replace them with brand new products'. However in the policy wording document it simply states, 'we will replace it with an item of similar quality'. On calling the company's customer service department they stated that the policy was new for old but kept pointing me to the policy wording document and the phrase 'similar quality'. When I pointed out that quality is totally subjective and wouldn't necessarily be taken to mean 'brand new', they haltingly agreed. They then put me through to the claims department for a more detailed response to my query. 

The reason for my deep dive into the detail of the policy wording was that I made a claim on my previous policy with the same company last year (2023). The wording in the 'policy wording' document was identical: an item of a 'similar quality'. However, the replacement I received for my damaged laptop was a refurbished 2021 model with a 2" smaller screen size. I did query the use of a refurbished item with the claims handling company at the time but was pointed to wording in the policy wording document. Given that I work for myself creating and hosting web sites, I needed a replacement urgently so I accepted the refurbished laptop.

However, having seen this 'brand new' statement on the web site on renewing my policy, I'm left feeling that I was short changed last year.

The use of the words 'brand new' is a powerful sales message, one that is likely to influence a purchasing decision. When I consulted what appears to be the relevant law covering this issue - the the Consumer Protection from Unfair Trading Regulations 2008 - I was drawn to section 5.2a, which states, and I'm paraphrasing here: The information provided in any way deceives or is likely to deceive the average consumer into taking a transactional decision he would not have otherwise taken. On the face of it this appears to confirm my suspicion that saying brand new and then providing a refurbished replacement is not right.

My view is that if a company states brand new in the context of replacement items, the replacement should indeed be brand new...and not refurbished. Retailers make a clear distinction between the sale of new and refurbished products and specialist gadget insurers are at pains to point out that replacements with either be new or refurbished. It seems that my insurer doesn't feel they need to make any such distinction and feels comfortable claiming one thing and then doing another.

My discussion with the company's claims team gave me the distinct impression that they feel I should be grateful for my refurbished replacement, given that the processor in the refurbished item is superior to the one in my original (Apple M1 versus Intel i7). This is true but I think they're missing the point. They've made a claim in their sales communication and should stand by their claim. I think the courts would agree.

And don't get me started on the totally subjective use of the phrase, 'similar quality' in the policy wording document. This may be suitable for a carpet or soft furnishings, but it is wholly inadequate and vague in the context of a laptop! 

What are your thoughts?

Brie

Frankly I would have argued with them that "new for old" is exactly that - a brand new item to replace the old one.  Not refurbished, not a bit like the first one.  Obviously if the item isn't available new as it's no longer make then you need to look at "similar".  But that wouldn't include one that is different in size, operating capacity etc.  You shouldn't be getting a 24" B&W tv if your 52" colour one gets destroyed somehow.  

I would ask them to confirm in writing that new for old means exactly that.  If they won't confirm in writing I'd make a note of a phone conversation where someone confirms this.  So "Bob said new for old, called 0123 456456 at 10am on 19/11/24".  They should have a recording of the call.

PHK

Did your previous policy have the same terms as this new policy?

I ask this because most insurance is on a like for like basis rather than new for old, which tends to attract a higher premium. 

Also, “similar quality” and whether something is new are two different things. 

In insurance contracts, quality normally refers to make, model/style, price and features rather than whether something is new. 

For example, if you claimed for an £11,000 Natuzzi sofa you wouldn’t accept a brand new Argos software as they are of obvious different quality. But you’d probably accept a brand new hand made sofa from Darlings of Chelsea. 

Can you link to the terms and conditions of the contract so that we can advise better. 

MrBadgerEsq

PHK said:

Did your previous policy have the same terms as this new policy?

I ask this because most insurance is on a like for like basis rather than new for old, which tends to attract a higher premium. 

Also, “similar quality” and whether something is new are two different things. 

In insurance contracts, quality normally refers to make, model/style, price and features rather than whether something is new. 

For example, if you claimed for an £11,000 Natuzzi sofa you wouldn’t accept a brand new Argos software as they are of obvious different quality. But you’d probably accept a brand new hand made sofa from Darlings of Chelsea. 

Can you link to the terms and conditions of the contract so that we can advise better. 

PHK

My old policy had identical terms to the new policy. The document has been redesigned, and I can't speak for every last word and comma, but the pages relating to claims and their handling are identical - word-for-word.

The issue here is the big, bold statement on their web site that unambiguously states 'New for Old - With our content cover, if your possessions are damaged, we replace them with brand new products'. This is then seemingly contradicted by the wording in their policy document, which states 'item of similar quality'. This to me is black and white. They use the first statement to persuade customers to make a transactional decision, but then use the policy document to provide replacements at a cost lower than brand new items. 

I would have been perfectly content had the statement on the web site boldly stated, 'New for old - With our content cover, if your possessions are damaged, we replace them with products of a similar quality'...with a asterisk and secondary statement defining what quality means in 'insurance terms'. But it didn't.

I agree with you statement, '“similar quality” and whether something is new are two different things.' That is the central issue here.

I think there is also an issue with your comment, 'In insurance contracts, quality normally refers to make, model/style, price and features rather than whether something is new.". It may well be that in insurance circles quality is taken to mean same make, model, price and features. But, like other consumers, I'm not in insurance circles and thus must take the word 'quality' as a subjective and rather vague definition of what I should expect. If we were in a court of law, quality could be taken to mean any number of things, quite aside from what the insurance industry itself loosely defines it as.

Policy documents, by their very nature should be definitive and leave no doubt in the minds of both the issuer and the consumer as to what will happen as a result of a claim. I think consumers should be aware that use of the word quality, especially when it comes to items such as laptops and gadgets, is ambiguous and open to interpretation. Consumers finding the use of 'quality' in their policy document should really check what their insurance company's definition of quality is...within the 14 day cooling off period. But surely this is the wrong way round. Insurance companies have no end of pages in their policy document to provide accurate definitions. 

As it stands, stating 'brand new' and giving refurbished, looks like cost skimming / profit maximisation. If they're doing this to all of their customers, which clearly they are, then this misrepresentation, at scale, has the feel of a mis-selling scandal with class actions to boot.

The difference in value between a 'brand new' and replacement laptop, in my case, was about £300. Let's say they replace 10,000 electronic devices per year in the same fashion they did mine. That equates to £3m in savings! You may consider these to be wild figures, but if this practice is widespread in the industry then these figures don't feel that wild. Consider also that many electronic devices these days are very expensive - Dyson, Apple, various OLED TV manufacturers, etc. Combining all of these devices could make these numbers tiny and the net gain to the insurance companies way higher than £3m.

I'm going to keep my powder dry on the name of the Insurance company for now, lest it prejudice my current conversations with them. I want to hear what they have to say without the pressure of outside scrutiny first. I've read of companies shutting up shop and hunkering down when word gets out.

What I will say is they are a major high street brand with an insurance arm. 

DullGreyGuy

MrBadgerEsq said:

What I will say is they are a major high street brand with an insurance arm. 

So Tesco if its really an insurance arm, more options if its that they've just licensed their brand to other companies to use. 

Looking at Tesco's site it does state its new for old on the site but their policy wording does explicitly state as new for old of the same quality. 

"New for old" seems to have fallen out of favour in policy wordings even though thats what most policies are, only the budget bottom of the barrel ones are indemnity basis (note, most exclude clothes from new for old).

M&S Home, which is just Aviva borrowing the name, says new for old on their website, their policy wording states "like for like based on the nearest equivalent in the current market". Having claimed with them it was straight cash and Amazon gift vouchers for the current retail price of new items. 

Ultimately, if your worried, screenshot the website where it says its new for old etc and keep it or check that the WayBack Machine has captured the site very close to the date of purchase and it shows the same messaging. 

PHK

MrBadgerEsq said:

PHK said:

Did your previous policy have the same terms as this new policy?

I ask this because most insurance is on a like for like basis rather than new for old, which tends to attract a higher premium. 

Also, “similar quality” and whether something is new are two different things. 

In insurance contracts, quality normally refers to make, model/style, price and features rather than whether something is new. 

For example, if you claimed for an £11,000 Natuzzi sofa you wouldn’t accept a brand new Argos software as they are of obvious different quality. But you’d probably accept a brand new hand made sofa from Darlings of Chelsea. 

Can you link to the terms and conditions of the contract so that we can advise better. 

PHK

My old policy had identical terms to the new policy. The document has been redesigned, and I can't speak for every last word and comma, but the pages relating to claims and their handling are identical - word-for-word.

The issue here is the big, bold statement on their web site that unambiguously states 'New for Old - With our content cover, if your possessions are damaged, we replace them with brand new products'. This is then seemingly contradicted by the wording in their policy document, which states 'item of similar quality'. This to me is black and white. They use the first statement to persuade customers to make a transactional decision, but then use the policy document to provide replacements at a cost lower than brand new items. 

I would have been perfectly content had the statement on the web site boldly stated, 'New for old - With our content cover, if your possessions are damaged, we replace them with products of a similar quality'...with a asterisk and secondary statement defining what quality means in 'insurance terms'. But it didn't.

I agree with you statement, '“similar quality” and whether something is new are two different things.' That is the central issue here.

I think there is also an issue with your comment, 'In insurance contracts, quality normally refers to make, model/style, price and features rather than whether something is new.". It may well be that in insurance circles quality is taken to mean same make, model, price and features. But, like other consumers, I'm not in insurance circles and thus must take the word 'quality' as a subjective and rather vague definition of what I should expect. If we were in a court of law, quality could be taken to mean any number of things, quite aside from what the insurance industry itself loosely defines it as.

Policy documents, by their very nature should be definitive and leave no doubt in the minds of both the issuer and the consumer as to what will happen as a result of a claim. I think consumers should be aware that use of the word quality, especially when it comes to items such as laptops and gadgets, is ambiguous and open to interpretation. Consumers finding the use of 'quality' in their policy document should really check what their insurance company's definition of quality is...within the 14 day cooling off period. But surely this is the wrong way round. Insurance companies have no end of pages in their policy document to provide accurate definitions. 

As it stands, stating 'brand new' and giving refurbished, looks like cost skimming / profit maximisation. If they're doing this to all of their customers, which clearly they are, then this misrepresentation, at scale, has the feel of a mis-selling scandal with class actions to boot.

The difference in value between a 'brand new' and replacement laptop, in my case, was about £300. Let's say they replace 10,000 electronic devices per year in the same fashion they did mine. That equates to £3m in savings! You may consider these to be wild figures, but if this practice is widespread in the industry then these figures don't feel that wild. Consider also that many electronic devices these days are very expensive - Dyson, Apple, various OLED TV manufacturers, etc. Combining all of these devices could make these numbers tiny and the net gain to the insurance companies way higher than £3m.

I'm going to keep my powder dry on the name of the Insurance company for now, lest it prejudice my current conversations with them. I want to hear what they have to say without the pressure of outside scrutiny first. I've read of companies shutting up shop and hunkering down when word gets out.

What I will say is they are a major high street brand with an insurance arm. 

You should note that insurance companies don't pay retail price. 

But it stands that we can't answer your question fully without seeing the terms of the contract and comparing to the statement. 

Anything else is speculation. 

MrBadgerEsq

But it stands that we can't answer your question fully without seeing the terms of the contract and comparing to the statement. 

PHK

I’ve got all of the evidence and data I need now.

The company in question is John Lewis Money (formerly John Lewis Finance). The insurance is provided by Munich Re Digital Partners. As with many other companies offering insurance, there is a fairly complex web of business actually providing and managing the cover. In this case the hierarchy is:

• John Lewis Money, appointed representative of:
• Munich Re Digital Partners: outsource management to: 
• Hood Group: outsource claims management to:
• Sedgwick: outsource replacement IT products to
• Value Checkers

The page making the ‘brand new’ statement is only accessible at the end of the quotation process pages, thus one has to fill in four pages of details to get to it. Its URL (home-insurance.johnlewisfinance.com/review-and-pay/review) cannot be reached directly. 

Attached is a screen shot. It would be useful if others went through a dummy quotation to get to this page and then screenshotted it - in case the wording miraculously changes, which I expect it will when this issue seeps through John Lewis to someone with the authority to make a change. It would be helpful to post your screen shot here. Fortunately Chrome Inspector allows me to access the modification dates.

Also attached is a screen shot of the relevant section of the policy wording document. This can be accessed directly on a link in the Policy Wording section link in the bottom of the Home Insurance page (johnlewisfinance.com/insurance/home-insurance.html#PolicyWording). Comparison between the 2023 and 2024 wording attached.

The use of the word 'quality' still rankles in the context of a laptop. At face value, which is how consumers have to consider it, it is too vague. 

See what you think. 

MrBadgerEsq

I have a statement from Value Checkers now saying they don't have a 'new for old' agreement with John Lewis products. This also conflicts with the 'new for old' statement on John Lewis Money's web site.

This is increasingly looking like a cockup in the oversight of web site copy preparation and sign-off.