When Bryan's home was damaged by an electrical fire, he got in touch with us as he felt the loss adjuster's valuation was wrong.
Bryan’s home had only been insured for a few months when disaster struck. An electrical fire broke out and although firefighters were able to put it out, a few rooms in his home were damaged.
Bryan called his insurer to make a claim and they sent their loss adjuster to inspect the damage. They estimated the cost of rebuilding Bryan’s house – the ‘value at risk’ – at around £150,000.
The insurer considered the loss adjuster’s report while deciding whether to accept the claim. They noticed that the building was only insured up to £100,000 and concluded that the house had been underinsured. They accepted the claim but decided to settle it proportionately, so Bryan only got part of the maximum £100,000 he was insured for.
Bryan didn't think that this was right, so he complained to the insurer. He questioned the loss adjuster's valuation and said that he wanted the full payment. He pointed out that his house was built using a timber kit, so was much cheaper than traditional brick buildings.
The insurer wouldn’t change their mind, so Bryan asked us to look into it.
What we said
We asked both sides what had happened. Bryan gave us all the evidence he had about how much the house originally cost. This included the land, labour, building, decorating and furnishing costs (roughly £110,000). An invoice showed that the timber kit he used had cost about £30,000 when he bought it 10 years earlier.
The insurer gave us the loss adjuster’s final estimate for the value at risk. But said they weren’t able to show us how the adjuster had reached this estimate.
We found that building a house from timber kits the size that Bryan had used would cost less than the loss adjuster had estimated. But when we researched the cost of using brick instead of a timber kit to rebuild Bryan’s house, the cost matched the loss adjuster’s estimated figure.
It seemed to us that the loss adjuster hadn’t factored in that Bryan’s house was built with a timber kit. This would then increase the estimate of rebuilding the house substantially.
When we told the insurer, they said that it was their policy to use ‘brick-based costing when assessing rebuilds’. We thought this was unfair, as it had left Bryan out of pocket.
Given the original cost to Bryan to build his home, and how much timber kits cost, we didn’t think he’d underinsured the house. We decided that the insurer should meet Bryan’s claim as though he wasn’t underinsured. So they paid him the money that had originally been deducted from the settlement.