Consumer complains when insurer reduces claim settlement on her home insurance

Home insurance

Meera lost an item of jewellery but her insurer reduced her claim settlement, saying she was underinsured. Unhappy with the outcome, Meera complained to us.

What happened

When Meera took out a contents insurance policy, she was asked to estimate the total cost of replacing all of her items as new. She said £30,000, but after she lost an item of jewellery, her insurer said that figure was too low and it should have been £50,000.

Had it known that, the insurer would have charged £500 instead of £400. That meant Meera had paid 80% of what she should have done – so the insurer offered to pay 80% of her claim.

Meera felt the insurer should have paid the full claim and made a complaint. Unhappy with the outcome, Meera brought her complaint to us.

What we said

We were satisfied that Meera’s answer was unreasonable, as the insurer showed us the likely value of her items at the time she took out the policy was £50,000.

Meera said she hadn’t really thought about the question very much and had forgotten how much jewellery she had. So we thought it was fair for the insurer to pay 80% of the claim.