Danyal claimed for a broken boiler on his insurance but was unhappy about the policy limit and how his insurer applied the excess.
What happened
Danyal’s boiler broke down and he made a claim under his home emergency insurance policy. The insurer said the total cost of the repair was £700, but there was a policy limit of £500. That meant that the most the insurer would pay was £500 – and only after Danyal had paid a £50 excess.
Danyal was unhappy about the claim limit and the excess. He thought it was unfair for the insurer to pay only £450, as it meant he would have to pay the other £250. He made a complaint to his insurer and, unhappy with their response, brought his complaint to us.
What we did
First, we checked whether the claim limit was clearly pointed out when Danyal bought his home emergency insurance policy. We saw that the policy documents clearly explained the £500 limit, so we felt it was fair for the insurer to relay this.
We then looked at the policy definition of ‘excess’. The terms said excess was “the amount of money that must be paid by the insured as the first part of each and every claim”.
We thought that the definition was reasonable. However, we felt that the excess should be deducted from the total claim, not the policy limit. The definition said the excess was the “first part” of every claim.
Here, the claim cost was £700, not £500. If the excess was taken from the policy limit, Danyal would not get the benefit of the full claim limit.
We upheld Danyal’s complaint. We said the excess should be deducted from the £700. Then the insurer would pay its contribution of £500.
This left Danyal to pay £50 excess and £150 of the repair costs – not the £250 the insurer originally said he should pay.