Insurance claiming house was underinsured and have reduced payout

28
Found 22nd Mar
Just wondering if anyone has had this happen to them.
My Dads new tenants caused a kitchen fire the day they moved in. The damage was quite extensive but was contained in the kitchen.
The assessor came out and said that there should be no problems and because of our location just to get a quote from a local company and submit it.
He mentioned on the day he believed the value the house was insured for was a bit low.
4 months have now passed and after numerous phone calls to them they have come back and said that the house was underinsured by 40% therefore they would only be paying 60% of the claim.
The quote was almost £25k so it’s a massive hit to take.
Has anyone had anything similar and how are you supposed to know how much to insure your property for? I know it’s rebuild value but it’s a bit worrying that they can then decide it’s undervalued if you need to make a claim.
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Sounds a bit underhand, who is the insurance company?
Think I used a website that tells me how much to insure my house, I know it's about double what it would retail for
I would maybe take it to the insurance ombudsman
Edited by: "snoopy18" 22nd Mar
The maths is wrong. If the property is underinsured by 40%, it means that only 60% of the property is insured so they should pay 60% of the claim. Check your figures, have you quoted this incorrectly as you said they have agreed to only pay 40% of the claim.

Where did your dad get his insured sum from when he got the property insured? Also, who is the insurer
Check zoopla for the property value suggested there to see how it compare
farmlama12 m ago

Check zoopla for the property value suggested there to see how it compare



That will only tell you the retail value. Insurance companies go by the rebuild cost which may be significantly different.
The Association of British Insurers (ABI) provide a free calculator that gives an approx rebuild cost.
Suggest you put in the details of your dads property and see how it compares with the sum he had it insured for. If it shows he did have it insured for the correct sum then you can use it as evidence to go back to the insurance company with, but since the assessor obviously had a gut feeling that it was a bit low, I rather fear that it will show your dad actually was under-insured, in which case there may not be much you can do.
Here's the link, you have to register but its free, and you can use it 4 times a year;
abi.bcis.co.uk/
Edited by: "Delbert.Grady" 22nd Mar
Delbert.Grady53 m ago

That will only tell you the retail value. Insurance companies go by the …That will only tell you the retail value. Insurance companies go by the rebuild cost which may be significantly different.


That doesn't even tell you the retail value. It is well known that zoopla is a joke when it comes to their estimate of a property's current value. Zoopla has very little credibility with estate agents. Rightmove is their must sales site.

Estate agents are slowly ditching zoopla.
When insuring property you pay mostly for the land it’s on, then the rest, the smaller amount is how much it would cost to rebuild the house if the whole building was damaged. I’d go to the ombudsman and see what they have to say about it, after writing a letter letting them know of your intent to go to the ombudsman, and giving them 14 days to reach an agreement.
My surveyor gave me the rebuild cost when I bought my house. Although my insurer provides £1m cover for rebuilds which removes the need to estimate it yourself.
£25k to gut and refit a kitchen is an outrageous quote unless it's a very large kitchen with high end fittings


If you are under insured, then its perfectly right they reduce the payout accordingly.
Edited by: "chocci" 23rd Mar
His long name they had the property? If its done years, then they may have fallen into the trap of just coving the same value to be insured, and not investing it annually. Not much to be done I think. Take the cash and arrange repairs yourself to get it in within budget (or minimise loss anyway).
mutley18 h, 51 m ago

The maths is wrong. If the property is underinsured by 40%, it means that …The maths is wrong. If the property is underinsured by 40%, it means that only 60% of the property is insured so they should pay 60% of the claim. Check your figures, have you quoted this incorrectly as you said they have agreed to only pay 40% of the claim.Where did your dad get his insured sum from when he got the property insured? Also, who is the insurer


They are paying 60% of the claim
£25k? Is everything gold plated? You can get an ok kitchen for £5k, and a very nice one for £10k. Or is sorting out the damage the reason why that quote is so high?
mutley110 h, 0 m ago

The maths is wrong. If the property is underinsured by 40%, it means that …The maths is wrong. If the property is underinsured by 40%, it means that only 60% of the property is insured so they should pay 60% of the claim. Check your figures, have you quoted this incorrectly as you said they have agreed to only pay 40% of the claim.Where did your dad get his insured sum from when he got the property insured? Also, who is the insurer


You are correct mutley1, that was an error on my part. They are indeed paying 60% of the claim and I’ve amended details to save confusion.
He has landlords insurance through Towergate. As for the figure it was insured for, I’m not sure but I for one will be checking through the ABI calculator that Dalbert.Grady mentioned that my own property is adequately covered!
kerrvin1231 m ago

You are correct mutley1, that was an error on my part. They are indeed …You are correct mutley1, that was an error on my part. They are indeed paying 60% of the claim and I’ve amended details to save confusion. He has landlords insurance through Towergate. As for the figure it was insured for, I’m not sure but I for one will be checking through the ABI calculator that Dalbert.Grady mentioned that my own property is adequately covered!


And get more quotes for the repairs as £25k is extortionate
Several points come to mind and most are mentioned above

> I suspect you could usefully join Which and join their Legal service if you are facing a 40% discount on £25k. The cost woudl be minimal in comparison. Do consider it. I use them and find it very helpful (I have no connection other than as a customer).

> This pickle will last longer than this claim so you have to act. Every insurance quote asks if you have had claims, claims rejected (you have been), special terms etc. You need to squash this assuming you are in the right or risk higher premiums on everything you insure (car, house, contents etc)

> The insurer must issue you with the details behind their workings. You have a consumer contract and it is covered by the Consumer Rights act 2015. They cannot simply send you a letter saying 40% under insured. They must state their workings in a fashion that a man in the street can understand. Do not answer any further questions from them that help them with this or allow them to revisit the property. They have made a decision and they now have to justify it.

> What did you base the insurance value on? Every site I have visited links to the ABI site and that mentions expensive kitchens. Did you have a property survey when buying? Rebuild value is a standard para. And you would have to have indexed the value since then. If the value on the report is under, you have a case against the surveyor who improperly advised you (or will support you against the insurer).

> What Insurance companies pay for work is a joke. I always wonder if they actually pay it or charge you the quoted cost and then pay a discounted rate - which would amount to fraud. Ask them for thee quote. And ask them to specifically assure you that this is the exact sum they will be paying the contractors with no refunds, kick backs etc. No fancy wording. A Yes will do nicely.

> Look at Which, Money Saving Expert, Trustpilot, Insurance Ombudsman and the insurers own complaints procedure. Do everything in writing, keep copies and use recorded delivery. Most of all, get an intelligent (not the same as opinionated) friend to review what you write before sending. It needs to be complete and to the point with relevant detail.

> Fairness has nothing to do with this. You are a consumer, not an expert. You are protected in many ways including stupidity where you as a consumer could not reasonably be expected to have known something like the kitchen was expensive. A Loss Adjuster is an expert and can spot an expensive kitchen a mile away. You can't. But if it was obviously expensive, you will be in the wrong.

I would be talking to Which Legal service. (yes, that is an unashamed plug but only because this is exactly when you need them and they are very helpful)
Edited by: "ccnp" 23rd Mar
If this help any, have a look on MSE.com's Cheap Home Insurance guide where it says How to complain about your insurance provider. You'll find a tool that helps draft a complaint, run by a firm called Resolver. It's free to use as well
ccnp2 h, 3 m ago

Several points come to mind and most are mentioned above> I suspect you …Several points come to mind and most are mentioned above> I suspect you could usefully join Which and join their Legal service if you are facing a 40% discount on £25k. The cost woudl be minimal in comparison. Do consider it. I use them and find it very helpful (I have no connection other than as a customer).> This pickle will last longer than this claim so you have to act. Every insurance quote asks if you have had claims, claims rejected (you have been), special terms etc. You need to squash this assuming you are in the right or risk higher premiums on everything you insure (car, house, contents etc)> The insurer must issue you with the details behind their workings. You have a consumer contract and it is covered by the Consumer Rights act 2015. They cannot simply send you a letter saying 40% under insured. They must state their workings in a fashion that a man in the street can understand. Do not answer any further questions from them that help them with this or allow them to revisit the property. They have made a decision and they now have to justify it.> What did you base the insurance value on? Every site I have visited links to the ABI site and that mentions expensive kitchens. Did you have a property survey when buying? Rebuild value is a standard para. And you would have to have indexed the value since then. If the value on the report is under, you have a case against the surveyor who improperly advised you (or will support you against the insurer).> What Insurance companies pay for work is a joke. I always wonder if they actually pay it or charge you the quoted cost and then pay a discounted rate - which would amount to fraud. Ask them for thee quote. And ask them to specifically assure you that this is the exact sum they will be paying the contractors with no refunds, kick backs etc. No fancy wording. A Yes will do nicely.> Look at Which, Money Saving Expert, Trustpilot, Insurance Ombudsman and the insurers own complaints procedure. Do everything in writing, keep copies and use recorded delivery. Most of all, get an intelligent (not the same as opinionated) friend to review what you write before sending. It needs to be complete and to the point with relevant detail. > Fairness has nothing to do with this. You are a consumer, not an expert. You are protected in many ways including stupidity where you as a consumer could not reasonably be expected to have known something like the kitchen was expensive. A Loss Adjuster is an expert and can spot an expensive kitchen a mile away. You can't. But if it was obviously expensive, you will be in the wrong.I would be talking to Which Legal service. (yes, that is an unashamed plug but only because this is exactly when you need them and they are very helpful)


Not so sure on the price of a kitchen as most insurance is done over a phone and you really need to include details about how expensive a kitchen is yourself unless you have a standard/average kitchen. Slightly off topic but I've upped my contents insurance a lot of times as they tend to drop the contents amount to give a better price and people tend not to realise how expensive the items they own are to replace. A lot of buildings insurance is terrible as they cut major corners, example being my mums front door got smashed but the insurance company wouldn't send anyone out for 24 hours to secure the property. Turned out that if anyone had injured themselves on the damaged pane then my mum would of been liable to a claim.

I would always recommend going to a broker with all your details and information and let them explain it to you. Doubt assume anything as that will always trip you up.
kerrvin1232 h, 53 m ago

You are correct mutley1, that was an error on my part. They are indeed …You are correct mutley1, that was an error on my part. They are indeed paying 60% of the claim and I’ve amended details to save confusion. He has landlords insurance through Towergate. As for the figure it was insured for, I’m not sure but I for one will be checking through the ABI calculator that Dalbert.Grady mentioned that my own property is adequately covered!


if he can prove that he got the figure from a surveyor, for example, if he got it from the survey when he bought the property and it had been insured since then with the value being increased by the insurer annually, or that he got it from the ABI calculator, which doesn't sound like he did as you yourself are not aware of this, then he can send that to Towergate and dispute their assessment.

they have poor customer reviews as you can see. insurers are great at taking your money but can be a nightmare when it comes to coughing up, which is why the cheapest quote from comparethemarket.com or similar comparison sites are not always the best insurer to insure with as the cheaper premium means nothing when they won't pay out.

uk.trustpilot.com/rev….uk

if you can prove that you have a case, then raise a formal complaint to their customer service and then on to the ombudsman if they do not resolve it satisfactorily.

your poor dad has had terrible luck with the tenants burning the place down on the first day they move in! you will find the premium for next year will increase significantly because of this claim and no other insurer will insure him without a huge premium.
Edited by: "mutley1" 23rd Mar
You need to write an official complaint to the insurance company outlining all the details and using appropriate terminology. Unfortunately you are going to have to put in some research. If you made the valuation 'to the best of your knowledge' then it is worth a complaint.
The loss adjuster who is handling the case has only one objective, minimizing the claim for the insurance company. It's worth it to them hoping you don't complain. Get stuck in, it's a war with these people. I fought my insurance for 9 months before they finally awarded 100% of a major claim... I'm still recovering. Good luck!
chocci7 h, 50 m ago

£25k to gut and refit a kitchen is an outrageous quote unless it's a very …£25k to gut and refit a kitchen is an outrageous quote unless it's a very large kitchen with high end fittingsIf you are under insured, then its perfectly right they reduce the payout accordingly.


When I say it was contained in the kitchen there was extensive damage in that everything needs ripped back to the bricks , windows smashed by fire brigade, new back door, appliances, flooring- the lot. Also smoke damage throughout the bottom floor of the house resulting in decorating and new carpet of adjacent living room. Unfortunately it all adds up.
The loss adjuster estimated on his visit that £25k would be about the quote he would expect therefore we didn’t question the quote from the local contractor.
kerrvin12350 m ago

When I say it was contained in the kitchen there was extensive damage in …When I say it was contained in the kitchen there was extensive damage in that everything needs ripped back to the bricks , windows smashed by fire brigade, new back door, appliances, flooring- the lot. Also smoke damage throughout the bottom floor of the house resulting in decorating and new carpet of adjacent living room. Unfortunately it all adds up.The loss adjuster estimated on his visit that £25k would be about the quote he would expect therefore we didn’t question the quote from the local contractor.



Nevertheless, unless the contractor was selected specifically by the insurer, you should obtain more than one quote. Even more so, considering you are having to pay 40% of it.
13.5k payout is very good for new kitchen.
MR11232 m ago

13.5k payout is very good for new kitchen.



but not so for 'kitchen there was extensive damage in that everything needs ripped back to the bricks , windows smashed by fire brigade, new back door, appliances, flooring- the lot. Also smoke damage throughout the bottom floor of the house resulting in decorating and new carpet of adjacent living room'
chocci4 m ago

but not so for 'kitchen there was extensive damage in that everything …but not so for 'kitchen there was extensive damage in that everything needs ripped back to the bricks , windows smashed by fire brigade, new back door, appliances, flooring- the lot. Also smoke damage throughout the bottom floor of the house resulting in decorating and new carpet of adjacent living room'


I take it back in that case
Back in 2007 my house flooded and I was too young to know about under insurance. I insured buildings for 50k but I thought I did 50k the year before but apparently it was £500,000. So that meant I was underinsured. I got a quotation for repairs for 10k but only got paid £1,700! So harsh.
I asked them to review it but they said I'm underinsured and the was the end.
Misslovely10 h, 57 m ago

Back in 2007 my house flooded and I was too young to know about under …Back in 2007 my house flooded and I was too young to know about under insurance. I insured buildings for 50k but I thought I did 50k the year before but apparently it was £500,000. So that meant I was underinsured. I got a quotation for repairs for 10k but only got paid £1,700! So harsh. I asked them to review it but they said I'm underinsured and the was the end.


Wow, lesson learnt I bet
Misslovely12 h, 7 m ago

Back in 2007 my house flooded and I was too young to know about under …Back in 2007 my house flooded and I was too young to know about under insurance. I insured buildings for 50k but I thought I did 50k the year before but apparently it was £500,000. So that meant I was underinsured. I got a quotation for repairs for 10k but only got paid £1,700! So harsh. I asked them to review it but they said I'm underinsured and the was the end.


That's an interesting story which has a twist to it for consumers.

What were the insurance company (the experts) doing letting the (lay) consumer insure for £50k. Very arguably, they should have refused to insure a property where the disparity is 90%. Last time I insured for that little was my first house in the early 80s when I paid £44k.

Never overlook the liability of an expert for allowing a lay consumer to put themselves in a commercially unsound position or in harms way. No-one in their right mind would go to Court but the Ombudsman would not be impressed by such a position.
Edited by: "ccnp" 24th Mar
ccnp1 h, 16 m ago

That's an interesting story which has a twist to it for consumers. What …That's an interesting story which has a twist to it for consumers. What were the insurance company (the experts) doing letting the (lay) consumer insure for £50k. Very arguably, they should have refused to insure a property where the disparity is 90%. Last time I insured for that little was my first house in the early 80s when I paid £44k.Never overlook the liability of an expert for allowing a lay consumer to put themselves in a commercially unsound position or in harms way. No-one in their right mind would go to Court but the Ombudsman would not be impressed by such a position.


Your 90% is based on the assumption the property rebuild cost was 500k.some insurers set an arbitrary amount when getting quotes to ensure underinsurance didn't occur. Many times, I have had house insurance where the insured amount was far in excess of the actual rebuild estimate. They were still the cheapest quote even when getting quotes with the accurate rebuild cost. Obviously, in the event of a full claim, they would only pay out the real rebuild cost.


I suspect misslovely"s rebuild cost was far lower than 500k but only a £1700 payout on a 10k claim suggests her rebuild cost should have been c.£275k which is very high unless she lives in a property valued in excess of £1m. I would definitely have taken this payout amount to the ombudsman.
Edited by: "chocci" 24th Mar
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