A customer doesn’t account for increases in the value of gold

Contents insurance Valuations

We looked into Mohammed's complaint after his wife's bracelet went missing and his insurer wouldn't pay the amount he thought he should get.

What happened

Mohammed took out a new home insurance policy which allowed him to insure individual, valuable items. One of these was a gold bracelet belonging to his wife, which was a favourite of hers. A few years earlier it had been valued at £4,500. This was the valuation that Mohammed gave the insurer.
A few years later after going out for the evening, Mohammed and his wife noticed that her bracelet had gone when they got home. She thought it must have come undone or fallen off during the evening. In the morning, Mohammed called their insurer to put in a claim so he could replace the bracelet.
The insurer instructed a loss adjuster to assess the claim. He looked at the details of the bracelet and estimated the replacement cost at about £8,500.
The insurer received the loss adjuster’s report and offered to pay Mohammed £4,500 - the amount he’d had the bracelet insured for. Mohammed wasn’t happy with this as he wouldn’t be able to replace the bracelet for £4,500. He believed that he should receive the full £8,500. He said that he’d insured the bracelet so that he could replace it if the worst happened.
But his insurer disagreed. They said that when Mohammed had taken out the policy their representative had made it very clear that he was responsible for keeping the bracelet's valuation up to date. They also said that he'd had several warnings about the consequences of underinsuring possessions when renewing his policy each year.
As the insurer wouldn’t change their decision, Mohammed brought his complaint to us.

What we said

We wanted to see what Mohammed was told about insuring his wife’s bracelet. We asked the insurer to send us a recording of the initial phone call with Mohammed.
It was clear from the phone call that the bracelet had been very important to Mohammed and his wife. The representative had stressed more than once the importance of getting regular valuations. At one point they said, “the really important thing, Mohammed, is that you get your wife’s bracelet re-valued when you’re renewing your policy. You don’t want to be underinsured if you make a claim.”
The conversation moved on to discussing whether re-valuations would affect Mohammed’s premiums or incur an administration charge. From this, we were confident that he’d been told about valuations.
The insurer also provided copies of their three most recent renewal documents. We saw that the covering letters had said ‘check that the level of cover is sufficient, as prices and circumstances can change year on year’. The forms contained similar warnings.
We decided that the insurer had taken a lot of effort to explain underinsurance to Mohammed, and had warned him of the consequences. We didn’t think the insurer had acted unfairly in paying Mohammed £4,500 to settle the claim and didn’t uphold his complaint.