While most home insurance cases are clear-cut, there are occasions when the insurer and the customer disagree. This can often lead to complaints to the Financial Ombudsman, which investigates the case. While the Financial Ombudsman doesn't write the law, the organisation's decisions can give insight into what is and is not considered reasonable and fair behavior by an insurer.
Here are some of the more notable cases highlighted over the past couple of years in the organisation's publication "ombudsman news" and the lessons customers can learn.
The heavy storms of late 2011 led to numerous claims and in turn several complaints. The key findings from five cases examined by the Ombudsman are as follows:
A customer who was redecorating their home had kept possessions in a temporary marquee in the garden. Although this wasn't necessarily unreasonable in itself, the claim was rejected because the customer didn't tell the insurer the possessions were now being stored outside, which was a significant change in circumstances.
A customer claimed for water damage after their roof leaked. The claim was rejected because it appeared the damage was caused by ongoing wet weather rather than a single storm. Another case involved a wall collapsing after heavy rainfall, but the claim was rejected because the wall had been deteriorating over time and would likely have remained standing had it been in good condition. A third case involved guttering that had collapsed after a week of heavy snowfall, which the insurer rejected as ongoing bad weather rather than a storm. In all three cases the key is that insurance policies only cover individual events, not ongoing activity.
An insurer refused to pay out for wind damage because the gusts hadn't reached a set speed (level 10 on the Beaufort scale, or 55 miles per hour.) The ombudsman ruled that the insurer should have paid out and said the deciding factor was the effects of the storm, not its measured strength.
A student complained after an insurer automatically renewed their contents policy and continued taking monthly payments, despite the student having moved abroad for a work placement. The ombudsman ordered the insurer to repay the premiums and cancel the policy. Although automatic renewal clauses such as those included in the policy are legal, the ombudsman decided this one had not been made clear enough to the customer.
An insurance company refused to pay for a customer to have a lost custom-made ring replaced by the original jeweller, instead offering only to pay for a jeweller of the insurance company's choice to make a replacement (at a lower cost.) Although normally insurers have the right to source a replacement, in this case the ombudsman said the unique nature of the ring, made for an anniversary, meant another jeweller's efforts would not be a reasonable replacement.
An insurer refused to replace some expensive items after a burglary as the customer did not have receipts, though the customer had shown photographs of the items in the house and details of a valuation. The ombudsman ordered the insurer to replace them, noting the threshold is merely that the customer show enough evidence "on balance" of ownership.
PLEASE NOTE: The guidance published in this article is for information only and does not constitute financial advice or a recommendation of any particular home insurance policy or company. If you are in any doubt please consult an independent insurance adviser. A database of advisers in your area is available at www.unbiased.co.uk
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