OMBUDSMAN NEWS - under-insurance Buildings and contents insurance can be a tricky area for a lot of people. One area in particular where we see problems arise is where people are asked to give their own valuations of how much their contents are worth. It can be difficult for people to calculate the value of their possessions – and we wouldn’t expect consumers to be experts at this. So it can be very stressful for consumers when they’re told that they’ve “under-insured” themselves – as a result of underestimating how much their possessions are worth. They’re usually only told about this after they put in a claim – by which time it can be too late. We see a range of responses from insurers to the issue of under-insurance. Some pay the claim, some pay a reduced amount, and some insurers would cancel the policy completely. With cases we see involving under-insurance, our approach is similar to the approach we take to complaints involving “misrepresentation”. The crucial point in cases like these – and in many insurance disputes we see – is whether insurers are asking their customers clear and straightforward questions. For example, we see application forms which ask “how much cover do you need?” when what the insurer actually wants to know is “what’s the total value of all the items in your home?” If an insurer didn’t ask the consumer to tell them the cost of replacing all their contents – and didn’t warn them of the consequences of under-insuring their contents – we may well take the view that the insurer should pay the claim in full, rather than settling it “proportionately”. In some cases we see the advice given by insurers can be misleading and lead the consumer to underinsure their contents. For example, in some cases insurers refer consumers to online valuation calculators without checking if the calculator is suitable for that particular customer. Similarly, in other cases we see where a policy came up for renewal, the insurer pre-filled parts of the form and didn’t ask the consumer to check the accuracy of the information. We appreciate online calculators and pre-filled forms can help consumers – but sometimes we see cases where these have led to things going wrong. Consumers also have their part to play. They’re responsible, when asked, for giving the best estimate they reasonably can of the value of their contents. We’re unlikely to find against an insurer just because they’ve not warned their customer that valuations can change over time. Gold costs more than it used to – and it would be a consumer’s responsibility to make sure their gold and jewellery is fully insured. Obtaining clear and complete information is crucial to insurance. Which is why we don’t see many problems arising when insurers ask the right questions – which consumers are able to answer accurately.
Posted on: Tue, 18 Nov 2014 16:18:52 +0000
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