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tm78

insurer discount in cash settlement for household repairs(drying)

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FOS-92 says that it is ok if the insurers discount is deducted from cash settlement for replacements, does the same apply to repairs?

 

" In such instances we will not usually consider it unreasonable for the insurer to deduct from the cash settlement any discount it would otherwise have obtained from the retailer."

 

 

I had a small flood and obtained 3 quotes for drying works:

 

1k - from the insurance using their preferred contractor

2k - from the insurance preferred contractor but as a private customer

3.5k - another certified drying specialist but with a wider scope(underfloor space included)

 

Is the insurer allowed to deduct their "bulk discount" with contractor(>50%) from the cash settlement for repairs, i.e. pay me the cash settlement of 1000 even though there is no contractor that would do a private job for that price? Even the insurance preferred contractor doesn't charge that.

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The Insurers have an obligation to all their policyholders to keep claim settlement costs as low as possible, while meeting obligation to individual policyholders. By obligation I mean, will the £1k charged by their preferred contractor cover the cost of doing a proper job in your home to recover the house to its previous condition, before the water damage.

 

Your challenge with the Insurers should be about the adequacy of the work suggested and not the amount of money paid to contractors. Insurers these days will have massive contracts with major companies to deal with x number of water damage claims and the amount paid per claim, will be a lot less than for an individual contract. You can only win, if you stick to arguments about the adequacy of the work. The Insurers preferred contractors will often try to get away with doing the minimum, so you need reports from other contractors that more work is required or an independent loss assessors report.


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Why not just use their contractor? if you have good reason not to use them, i.e. previous complaints, tell them that and get them to appoint another.

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unclebulgaria67, thank you for the quick reply!

Thinking of starting my own insurance company. Will ask preferred contractors to quote the repair cost to be exactly equal to the excess the customer would have to pay. If the customer uses my preferred contractor, then I will pay the actual repair cost to the contractor by some other channels, i.e. "a reliable business partner bonus payment" for every 100 claims repaired. :)

Seriously, what stops the insurance companies from doing that? Do you think it is a good idea to submit a FOI to see the contract negotiated between insurance company and their preferred supplier?

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FOI does not apply. It only applies to government type organisations.

 

You are wanting an argument with Insurers about how much they are willing to spend on your claim, when you should be concentrating on what work is actually required. If you can provide evidence of more work being required than the £1k estimated quote, then provide the Insurers with the information. If it is justified, then Insurers will fund the necessary work, but they may just ask their preferred contractor to re-quote to include this extra work.

 

You are clearly unhappy, as otherwise you would not go online to seek help. Get hold of the information you need about the extent of works and take up a complaint with the claims manager/director of the Insurers. That is the only way you will get this sorted within reasonable timescales.


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