Accidental dual insurance (doh!) in the event of a claim.

[vernon123]

Hi, newbie here, hoping for some useful advice.

 

In summary, my question concerns accidental dual insurance and what to do in the event of a claim.

 

My situation:

 

About three weeks ago my garage was broken into and my bike, worth £2,500 was stolen. Naturally, I notified the police and my buildings and contents insurance company (Halifax) as soon as possible. I have a claims consultant from Halifax visiting me next week, which I was told was standard practice given the value of the claim for a single item (the bike was covered for said value under their single item cover).

 

However, in going through my files to prepare for the visit I have discovered that, since January, I have also inadvertently had building and contents insurance with Nationwide. My policy from last year had apparently auto-renewed (just found the letter which gives me 21 days notice of the right to cancel!) and, amongst all the other direct debits, I hadn't noticed the £25 or so leaving my account each month. I'm now almost £250 quid out of pocket for what I guess was a fairly simple mistake to make and, as an aside, any advice on how to recoup those premiums if possible would be appreciated.

 

However, returning to the matter of the outstanding bike claim with Halifax, what should I do? Two concerns immediately spring to mind:

 

A) That Halifax are aware of the dual insurance and are suspicious that I may be trying to commit fraud - which I'm not (this was just an honest mistake) and that is the real reason they are sending the claim consultant to visit me. Also, they may be looking to shift some (50%?) of the liability onto Nationwide.

B) Who is actually liable for the claim given that I've paid both insurers for cover? - Halifax have the better cover since the bike is named under their single item policy. So, in the event of dual liability I may lose out if Nationwide are unable to cover half the cost.

 

My ideal resolution would be if I could cancel Nationwide, and somehow get my money back and then just get the claim fully repaid by Halifax. Is this likely to be even possible?

 

Even if i have to take the hit on the overpaid premiums with Nationwide, what is the best way to ensure I recoup the full price of the bike?

 

Is it best to wait until the guy from Halifax comes to visit and then claim ignorance if he mentions dual insurance cover or should I be upfront and contact Halifax and/or Nationwide now?

 

Any advice on the best course of action you ladies and gentlemen can suggest would be greatly appreciated.

[LemonTwist]

It is likely that the claim will be settled on the principle of contribution. This means that wherever dual insurance exists, each insurer would pay their rateable proportion of the claim.

 

In order to calculate the rateable proportion for each insurer, the formula is: the policy sum insured divided by the total sum insured (for both policies). Then you multiply the result by the amount of the loss (ie £2,500).

 

As a result of this formula, you shouldn't be any worse off even though there was dual insurance. It means that if the sum insured on the Halifax policy was higher than that for Nationwide, Halifax would have to pay a higher rateable proportion of the claim.

 

It is perfectly legal to have dual insurance (even knowingly) but in practice it isn't worthwhile as you can only ever claim once for each loss. Even if a claimant tried to claim with multiple insurers for the same loss, they wouldn't succeed because virtually all major insurers record their claims on the Claims and Underwriting Exchange (CUE) database. (I'm not saying you were trying to do that, but I just thought I'd mention it so you are aware of how the industry manages situations like these).

[vernon123]

Thanks for the quick reply. So should I contact Nationwide and give them all the same details that I gave Halifax, or will Halifax be able to do that for me? Is there likely to be any problem with the lateness of the claim given that the burglary occurred about three weeks ago?

 

Also, I presume from what you've said that getting a refund from Nationwide is out of the question but will I be able to cancel the policy without incurring extra costs i.e. taking the money I've (mis)spent on monthly premiums in lieu of a cancellation charge?

[LemonTwist]

If you tell the Halifax about the dual insurance, they should be able to work things out with the Nationwide by themselves. So I don't think the lateness of the claim will be a problem.

 

There is still a chance you might be able to cancel the Nationwide policy, but you would have to see what both companies say.