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ombudsman news

issue 75

January/February 2009

complaints involving household contents insurance

issue 75 index of case studies

  • 75/6 - when part of a matching bathroom suite is damaged - policyholder asks insurer to contribute to cost of an entire new suite
  • 75/7 - policyholder replaces entire bathroom suite when insurer fails to let her know if a matching replacement can be obtained for her damaged bath
  • 75/8 - insurer refuses claim for a lost designer watch because policyholder cannot provide any proof of ownership
  • 75/9 - after claiming for a damaged carpet, policyholder questions insurer's assessment of its replacement value and the offer of a reduced cash settlement
  • 75/10 - policyholder told by insurer to replace stolen antique jewellery by selecting new items from a limited list of high-street retailers

75/06
when part of a matching bathroom suite is damaged - policyholder asks insurer to contribute to cost of an entire new suite

The basin in Mrs N's bathroom was accidentally damaged, so she rang her insurer to check she was covered for the cost of replacing it. The basin was part of a matching suite and she was worried she might not find a new basin that looked the same as the rest of the suite.

The insurer later told us it outlined what its normal approach would be where a matching item could not be obtained. It said it explained to Mrs N that it would meet the full cost of replacing the damaged item. It would probably also make a contribution towards the cost of replacing the undamaged items in the bathroom suite. Its contribution was likely to be about 50% of the cost. This approach is the one we would usually expect an insurer to take in such circumstances.

Mrs N said the insurer had told her it was "highly unlikely" an exact replacement could be obtained for her basin. She should therefore get a quotation for a new bathroom suite.

A few days after phoning the insurer, Mrs N visited a bathroom supplier and obtained a quotation. Meanwhile, the insurer's representative arranged to inspect the damaged basin. He told Mrs N he would establish whether or not an identical replacement could be sourced, and he would then report back to the insurer.

Before the representative had submitted his report, and without contacting the insurer again, Mrs N went ahead and bought a new bathroom suite. She then put in a claim for the full cost of the new basin and for half the cost of the rest of the suite.

The insurer told her it would only meet the part of her claim that related to the basin. It said its representative had managed to find an identical replacement for the damaged basin. There had therefore been no need for her to replace the whole suite.

Mrs N complained that the insurer was being unreasonable, and in due course she referred the matter to us.

complaint not upheld
Mrs N was adamant that the insurer had said it was "highly unlikely" that an exact replacement could be found. She said it was only because the insurer was so certain about this that she had bought the new bathroom suite.

We listened to the insurer's tape recording of its conversations with Mrs N. The insurer had said it was unlikely that a new basin could be found that matched the remaining items in the suite. However, the insurer had also stressed that its representative would look into this for her. The insurer made it very clear that she should wait for the representative to report back. She should then contact the insurer again before taking things any further.

We looked at the length of time the insurer and its representative had taken to progress matters. We did not think this was at all unreasonable. And there was nothing to suggest that the insurer had misled Mrs M in any way, either about what the policy covered or about how it would deal with her claim.

We said the insurer had not acted unreasonably, in the circumstances, and we did not uphold the complaint.

75/07
policyholder replaces entire bathroom suite when insurer fails to let her know if a matching replacement can be obtained for her damaged bath

Miss A contacted her insurer after her bath was badly damaged. The insurer said its representative would inspect the bath. He would then find out if it was possible to replace it with a new bath that matched the rest of her bathroom suite.

The insurer's representative failed to turn up on the day he had agreed to visit Miss A at home. The insurer apologised and arranged a new appointment for a couple of weeks later. Unfortunately, the representative again failed to turn up.

By this time, Miss A was getting very annoyed at the insurer's apparent lack of progress with her claim. She visited a number of suppliers to try and find a suitable bath herself. However, she concluded that nothing was available that was even an approximate match to the rest of her bathroom suite. She therefore ordered and paid for an entirely new suite and put in a claim for the total cost.

The insurer told her that, under the terms of her policy, she was only entitled to the cost of replacing her bath. It refused to pay for more than that and it dismissed her complaint that she had been unfairly treated. Miss A then came to us.

complaint upheld
The insurer maintained that it had made a fair offer in the circumstances. It said that Miss A had not given it the opportunity to establish whether it could obtain a new bath that matched the rest of her bathroom suite. If that was possible, then there would be no need for her to replace the entire suite.

We noted that the insurer's representative had twice failed to keep an appointment to inspect the damaged bath. And on neither of these occasions had anyone contacted Miss A to let her know the appointment was cancelled.

We listened to the insurer's tape recordings of its conversations with Miss A. These showed it had discussed very little with her other than the arrangements for the representative to visit her. She was certainly not given any clear explanation of how her claim would be progressed.

We said the insurer should pay Miss A an amount equal to the full value of the replacement bath. It should also pay 50% of the value of the other items in the new bathroom suite. We explained that this was in line with what is generally regarded as good practice in such cases, and Miss A was happy to accept.

75/08
insurer refuses claim for a lost designer watch because policyholder cannot provide any proof of ownership

Mr B made a claim under his contents policy for the cost of replacing his designer watch. He said he lost the watch while on a mountain-walking trip one weekend. As soon as he got home he reported the loss to the police and obtained a crime reference number.

His policy covered personal belongings in and away from his home. He told the insurer that the watch had been worth over £1,800. However, he was aware that his policy had a limit of £1,500 for single items. He had therefore managed to find and buy a replacement that was similar in style to the watch he had lost, but that only cost £1,450.

The insurer said it needed to establish his ownership of the lost watch before it could consider the claim. It asked to see the original receipt. Mr B said he did not have a receipt because the watch had been a gift. He thought it highly unlikely that the friend who gave him the watch would still have the receipt. In any event, he did not feel he could ask her about it.

When the insurer said it was unable to take matters further without the receipt, Mr B complained to us.

We looked in detail at the contents policy. Like many such policies, it included a section about the need for policyholders to provide proof of ownership when making a claim.

We reminded the insurer that possession of a receipt was not the only means of establishing ownership. If Mr B was unable to ask his friend for the receipt - or for a copy of her credit card statement showing the purchase of the watch - he might be able to produce the guarantee or the box the watch had come in. Or he might have a photograph that clearly showed him wearing the watch.

We contacted Mr B and asked if he could provide any such evidence. A few days later he wrote to tell us he was withdrawing his complaint and no longer wished to pursue the matter.

75/09
after claiming for a damaged carpet, policyholder questions insurer's assessment of its replacement value and the offer of a reduced cash settlement

Mr and Mrs K's living room carpet was badly damaged after a substantial amount of water came through the ceiling from the flat above. After contacting the firm that had supplied the carpet and obtaining a quotation for replacing it, they rang their contents insurer.

The insurer arranged for a loss assessor to inspect the damaged carpet. The loss assessor agreed that the carpet would have to be replaced. However, he said the quotation the couple had obtained was too high.

Under the terms of the policy, the insurer could decide whether to make a cash payment to the policyholder or to source the replacement item itself. In this case, the insurer decided to source the replacement itself. It sent Mr and Mrs K a letter authorising them to visit a specific supplier and select a new carpet. The insurer would then settle the bill direct with the supplier.

The couple visited the supplier in question and looked at the carpets that were available. They were concerned that the insurer had set them an overall price limit that was much lower than they thought it should have been. But in any event, the supplier had no carpets of a similar colour to the one that had been damaged.

Mr and Mrs K then contacted the insurer. They said the supplier they had visited had nothing suitable for them. The retailer who supplied their original carpet had assured them it was of a particularly good quality because of the density of the pile. They therefore said the insurer should increase the amount it was prepared to pay for a replacement. They asked the insurer to pay this amount direct to them, as a cash settlement. They would then find a suitable replacement themselves, from their own choice of supplier.

The insurer said the replacement value of the carpet was based on what the loss assessor considered appropriate. He had examined the damaged carpet carefully and had not found it to be of an especially high quality. The insurer was therefore not prepared to offer more than the amount it had already stated. And it said that any cash settlement would be 25% less than that amount. This was because it would have been able to obtain the carpet at a reduced cost if the couple had used its preferred supplier.

Unable to reach agreement with the insurer, Mr and Mrs K brought their complaint to us.

complaint upheld
When we looked into the case in detail, we found that the quality of Mr and Mrs K's carpet was not as high as their supplier had led them to believe. They were naturally very disappointed to learn this, as it suggested they had received a poor deal when they bought it. However, we considered that the replacement value they were offered was reasonable.

Taking into account all the circumstances of this dispute, including the couple's increasingly difficult relations with the insurer, we said the insurer should make a cash settlement. The amount should be sufficient for Mr and Mrs K to obtain, from a supplier of their own choice, a new carpet of the same quality as the one that was damaged. The insurer could not deduct the 25% reduction it would have got from its own supplier.

75/10
policyholder told by insurer to replace stolen antique jewellery by selecting new items from a limited list of high-street retailers

Mrs W returned home from work one evening to find that someone had broken in and stolen some of her possessions, including several small items of antique jewellery.

When she rang her insurer, it confirmed that it would meet her claim. She told the insurer that she was particularly distressed over the loss of the antique jewellery. She was aware that the individual items were not especially valuable in themselves. However, they were unusual pieces that had been passed down in her family over four or five generations.

A few days later the insurer wrote to Mrs W about her claim. She was very upset when she read the letter, which listed a couple of well-known high-street jewellers and a department store. The insurer told her to obtain replacements for the stolen jewellery at any of the shops on the list.

Mrs W told the insurer that its response to her claim was unacceptable. She said it was "ludicrous" to suggest that the retailers it had listed could supply suitable replacements for her antique jewellery.

Initially, the insurer refused to change its stance. Mrs W said she wanted a cash settlement, so that she could choose where to shop. She said this was the only way she would have any chance of finding jewellery of a similar style and quality to the stolen items.

Eventually, the insurer agreed to her request. However, it said the amount would be 20% less than the amount it had already agreed her claim was worth. This was because its initial offer reflected the preferential terms it could obtain from the suppliers on its list. Mrs W then referred her complaint to us.

complaint upheld
We told the insurer we were surprised to learn of the approach it had taken in this case. Our views on what is reasonable - where an insurer has to decide whether to repair or replace an item, or offer a cash settlement - are well-established. Indeed this topic featured in an ombudsman news article as long ago as October 2001 (issue 10).

We upheld Mrs W's complaint. We told the insurer to pay her a cash settlement equal to the full cost of replacing the jewellery. We said it should not deduct the 20% discount that it could get from its preferred suppliers. We said it should also pay Mrs W a modest sum to reflect the distress and inconvenience she had been caused by its poor handling of her claim.

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ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.

The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.