Where do I stand legally with my home insurers?
Question by ian n : Where do I stand legally with my home insurers?
My kitchen recently suffered flood damage, it was estimated that it will cost over £9200 to rectify.
I sent away the quote to my insurers ‘The Norwich Union’, and have just received a reply, stating that because I had an extension built on my home, it is underinsured, and therefore I am only entitled to £6300.
After the loss adjudicator visited us, to check the damage, she measured the rooms and then wrote to me, explaining that the house was underinsured, and stated how much we should be paying in the future. The next day I visited the Insurers offices and payed my new balance for the rest of the year. Nothing was mentioned about a previous deficit.
I have never claimed from my insurance before, and I’m wondering if they are trying to pull a fast one.
Has anybody else experienced anything like this before?
I need some advice please.
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I don’t know how it works in the UK, but you may have an “insure to value clause” or a co-insurance penalty in your policy. Insure to value means that you have to pay the premium for what it would cost to replace your home (example home replacement valued @ $200,000 and insured for $100,000 means that you may only be entitled to 50% of all damages). In this case the insurance coverage should have been closer to $200,000.
In the states you can turn in an “errors and omission” claim against your agent if you feel that they should have helped you more in determining the replacement cost of your home.
Hope this helps and good luck.
The person at the office, probably had no idea there was a deficit.
Yes, you need to insure your house for at least 80% of the cost to rebuild. If you underinsure your house, you only get paid the percentage of the claim, that you insured your house for.
You look about 1/3 underinsured, based on those numbers.
You have my sympathy but unfortunately the Norwich Union buildings policy clearly states that:
“At all times the sum insured must be at least equal to the full cost of rebuilding the buildings to the same specification, including an amount for removing debris, demolition costs and architects’ and surveyors’ fees.”
So I’m sorry to say that if you didn’t insure your house for enough or you altered the house thus increasing the rebuild cost without telling them, yes they can pro rate down your claim.
e.g. if you insured the building for 70,000 and the actual sum should have been 100,000 you only get paid 70% of any claim. Harsh I know especially since this is obviously an honest mistake on your part, but that’s the law.
One thing you can do (and I suggest you do) is to check their sums yourself.
The Association of British Insurers has a sum insured calculator on their website . It’s free and Norwich Union will accept the numbers it gives (they have to really) link below, obviously you have to take care to get the data right, but it’s not too tricky.
What I would do is perform the calculation on what your house is like now and compare that to what NU are saying. It should be the same (or close at least) if it isn’t I’d raise the issue with NU.
Nobody will say anything about a previous ‘defecit’, as technically you are free to underinsure your house if you want to save money on premiums. You don’t owe them any additional premium for previous years.
Sorry you’re having all this aggro, I’ve long since thought that they should make this clearer to people and put a link to the ABI site next to the ‘sum insured’ box on the quote form.