Stefan made a claim after some bad weather, but his insurer told him that he was underinsured. They voided his policy and declined his claim.
Stefan bought a house and took out buildings insurance with a sum insured of £750,000. A few months later there was some damage during bad weather and he made a claim. The insurer thought he might not have insured the building for enough and asked him how he arrived at that sum insured. Stefan said that’s how much he’d bought the house for. He’d heard the market value was always more than the rebuild cost, so he thought that figure would be right.
The insurer showed that when taking out his buildings insurance policy, Stefan was clearly asked to estimate how much it would cost to rebuild his home from scratch. And his pre-purchase survey said the rebuild cost was £1,100,000. The insurer showed us it didn’t insure any homes that cost more than £1,000,000 to rebuild – so it voided Stefan’s policy and declined his claim.
What we said
We looked at Stefan’s policy terms and conditions, the questions he was asked at the time of sale, and the information that was provided to him.
We were satisfied Stefan had been asked a clear question. The information readily available to him at the time showed his answer was unreasonable. Had the insurer known the reasonable answer, it wouldn’t have insured him at all. We were satisfied the insurer had acted fairly.
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