contents insurance - under valued items taken in burglary - help

[momon121]

Hi

 

A friend of mine took house insurance and had his jewellery valued at £10000 instead of £18000. Sadly this summer his house got burgled this summer and made a claim. Based on the value from 2008 he put the same value on his renewal policy this year.

 

The assessor highlighted that he had underinsured his items and has been asked to provide a written explanation how we valued the jewellery at £10000.

 

My friend is being honest he tells me he was not aware of the gold prices increasing and ignorant of the fact that it would have been advisable to seek professional valuation.

 

My friend would like to seek advice from you guys if he could anything that aid him in securing this payout.

 

Thanks for reading

[honeybee13]

Hello there. I have merged your duplicate threads.

 

I hope the insurance guys will be along later with advice for you.

 

My best, HB

[unclebulgaria67]

Pretty common knowledge that Gold prices have increased quite a lot since the banking crash. For the friend not to be aware of this, they must have been hiding in a hole, so I don't recommend using that as an argument, as it won't be believed.

 

All your friend needs to do is write saying that he had not got around to having new valuations done since 2008 and was happy to Insure on the basis of the 2008 valuations. Perhaps your friend could say that they were anxious about taking jewellery out of the house to have them revalued again.

 

It is worth searching the FOS site for information. e.g

 

http://www.financial-ombudsman.org.uk/publications/technical_notes/under-insurance-household.html

 

The Insurers may pay up to the value held on the policy, but they could make a deduction based on being under insured. When your friend took out the policy they inadvertently misrpresented the risk to the Insurers. It is possible that had the Insurers been aware that the jewellery was valued at £18k, that they would have required additional security measures to be taken. The additional security measures may have arguable prevented the burglary.

 

So this may be tricky and I can't give a definite response as what will happen. Hopefully the Insurers will deal with it in a commonsense way and not look to be too harsh on your friend. If your friend has any problem, he should make a complaint to the Insurers and if necessary follow it up with the FOS.

[momon121]

Hi

 

Thank you much. He is my manager and to be honest I do trust him he is one of those meticulous guys who goes by thebook. But your iinput has been definitely informative will get that relayed back to him and update you guys

[momon121]

Hi

 

I have attached the letter from the insurance and this is his reply to the letter:

 

Please kindly provide any input or feedback on the letter:-

 

In reference to your letter dated on the 25th October 2013, I thereby provide a detailed explanation of why I valued our jewellery at £10,000;

 

Initially we first acquired the building and content insurance online when we first moved in to our new property in 2008. At the time of entering we estimated our jewellery to be worth £10,000 that was based on our purchasing value on the jewellery amassed.

 

It has been since 2008 that we last purchased any gold weight of 22ct. The entire jewellery belonged to my wife and regrettably we did not seek any professional valuation for pricing, identifying and appraising our gold.

 

 

Since not purchasing any further gold I used the same valuation of 2008 When the renewal date was due in December 2012. Due to my lack of knowledge on gold prices I have therefore genuinely and mistakenly under-insured the content sum.

 

To learn that we have under-insured our jewellery has now come as a double blow to me and my wife. I feel so distraught and devastated that I have subjected myself to such trying moments for not seeking professional assistance.

 

Please kindly perceive my application on compassion grounds that I would never foolishly under-insure items below its true value knowing its implications as I am deeply angered and annoyed with myself for failing to provide its true value due to pure ignorance.

 

I have provided the above information with honesty and integrity and I sincerely hope it is sufficient. If you require any further information please kindly contact me.

 

Yours sincerely

[momon121]

Hi

 

I have attached the letter from the insurance and this is his reply to the letter:

 

Please kindly provide any input or feedback on the letter:-

 

In reference to your letter dated on the 25th October 2013, I thereby provide a detailed explanation of why I valued our jewellery at £10,000;

 

Initially we first acquired the building and content insurance online when we first moved in to our new property in 2008. At the time of entering we estimated our jewellery to be worth £10,000 that was based on our purchasing value on the jewellery amassed.

 

It has been since 2008 that we last purchased any gold weight of 22ct. The entire jewellery belonged to my wife and regrettably we did not seek any professional valuation for pricing, identifying and appraising our gold.

 

 

Since not purchasing any further gold I used the same valuation of 2008 When the renewal date was due in December 2012. Due to my lack of knowledge on gold prices I have therefore genuinely and mistakenly under-insured the content sum.

 

To learn that we have under-insured our jewellery has now come as a double blow to me and my wife. I feel so distraught and devastated that I have subjected myself to such trying moments for not seeking professional assistance.

 

Please kindly perceive my application on compassion grounds that I would never foolishly under-insure items below its true value knowing its implications as I am deeply angered and annoyed with myself for failing to provide its true value due to pure ignorance.

 

I have provided the above information with honesty and integrity and I sincerely hope it is sufficient. If you require any further information please kindly contact me.

 

Yours sincerely

[momon121]

Hi

 

I have attached the letter from the insurance and this is his reply to the letter:

[unclebulgaria67]

Nothing to add to what was said earlier. See what the Insurers do in response to the letter sent.

 

Personally I don't buy the ignorance answer. It is obviously a hindsight reaction, because nobody expects to be burgled and caught out being under-insured. I think it is more believeable to say that the jewellery was insured for £10k based on valuations from 2008, which were correct at the time.

[Mwynci]

I'm with UB67 here, there is no reason to not get the prices right, or at least close or demostrate some sort of understanding that prices rise, but regardless of reason and excuses, the fact is the insurance premium based on the amount covered is too low, so an average will apply, unless underwriting guides will demostrate they woudl never have touched this risk. it was an honest mistake anyone can make, but that doesn't mean they will see any sort of compassion.

Why the insurers/adjusters want reason why this happened is beyond me?? it's not like there is a gross misrepresentation, they(the OP's boss) just didn't get it right. That is just wasting time, giving false hope when they know already how they are going to settle this.

[honeybee13]

I'm with UB67 here, there is no reason to not get the prices right, or at least close or demostrate some sort of understanding that prices rise, but regardless of reason and excuses, the fact is the insurance premium based on the amount covered is too low, so an average will apply, unless underwriting guides will demostrate they woudl never have touched this risk. it was an honest mistake anyone can make, but that doesn't mean they will see any sort of compassion.

Why the insurers/adjusters want reason why this happened is beyond me?? it's not like there is a gross misrepresentation, they(the OP's boss) just didn't get it right. That is just wasting time, giving false hope when they know already how they are going to settle this.

 

Hello Mwynci and thank you for the reply, as well as UB67. Forgive me if I'm wrong, I'm not sure if anyone has explained how averageing works on this thread. Is there any chance someone can explain more than I remember from the insurance exams a long time ago please?

 

HB

[unclebulgaria67]

Hello Mwynci and thank you for the reply, as well as UB67. Forgive me if I'm wrong, I'm not sure if anyone has explained how averageing works on this thread. Is there any chance someone can explain more than I remember from the insurance exams a long time ago please?

 

HB

 

They can look at how much under-insurance has occured and then deduct that percentage from the claim. But it is not as straightforward as that. There will be a limit for valuables under the policy. Also the Insured may have provided valuations to the Insurers which confirmed the value at £10k. If the Insured provided valuations to the Insurers, then actually the question could be asked, as to why the Insurers did not apply the correct price increases and not just normal index-linking.

 

I have seen many cases where the Insurers have paid out what the Insured has covered their valuables for and not look to apply a reduction to the amount, because valuations were out of date.

 

Hence this is why the letter sent by the OP's manager was the wrong way to react. The Insurers will have thousands of customers with jewellery specified on their policies, for which the valuations are out of the date. While it is the Insureds responsibility to ensure that they increase the cover for their valuables, you would question as to what the Insurers did to communicate to their policyholders about the increase in precious metal prices.

 

I believe the FOS have ruled in cases similar to this, that the Insurers should pay out what the Insured has specified on the policy and not look to apply a reduction based on under-insurance. This is due to the rapid rise in precious metal prices, where the valuations are less than 6 years old. We are an exceptional times, following the banking crisis.

 

On a different note, I suspect that the Insurers will want to investigate this claim as fully as possible. Given that the jewellery was 22ct, I am suspecting that this is Indian gold and I do seem to remember that at this time of year there have been a spate of such burglaries before, in the run up to Diwali, which is this Sunday. The Insurers may be more interested in the risk issues, than whether they will apply an under-insurance deduction.

[honeybee13]

Thank you, UB, that's very comprehensive. I'm sure most of us will learn something here.

 

HB

[momon121]

Yes it is Indian gold. The only fear my boss has is that if he writes the letter he doesnt want to give the insurer any excuses not to pay out. Its very interesting what uncle Bulgaria has shared. Is there any template letter that could be used. I am thank ful to everyone you have provided my boss with much comfort

[momon121]

Please can you explain to what does index-linked mean and to what it refers too?

[unclebulgaria67]

index linking is where the Insurers increase the sums insured by the percentage published by government statistics. It relates to consumer durables, which are the standard items in peoples homes and not really jewellery.

 

There is no template letter. I would suggest your boss keeps the letter staightforward. That the Insurance values for the jewellery were based on 2008 prices and that he was not aware that the Insurance policy contained any terms that required a re-valuation every few years.

 

He should not state that he was not aware gold prices had increased, as that would be silly. Most people are aware that gold has increased in price.

[manofmystery]

I'm not sure if anyone has explained how averageing works on this thread. Is there any chance someone can explain more than I remember from the insurance exams a long time ago please?HB

 

Average(under insurance) is used when the insured has undervalued an item they have insured. From what I remember the sum for working out how much they will pay is as below;

 

Sum Insured

---------------

Value of goods at time of loss x loss = Claim settlement

 

So if someone had a loss of 800, they were covered up to 10,000 on their policy but in the loss adjusters opinion there is 12,000 average would be worked out as 10000/12000 x 800 = £667 to be paid

 

Hope this helped.

 

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Please note that this advice is given informally, without liability and without prejudiceicon. Always seek the advice of an insured qualified professional. All my legal and nonlegal knowledge comes from either here,my own personal research and experience and/or as the result of necessity as an Employer and Businessman.

 

By using my advice in any form, you agreed to waive all rights to hold myself or any persons representing myself of any liability.

 

 

" No one can make you feel inferior without your consent " - Eleanor Roosevelt

[honeybee13]

Hello Momon.

 

I've removed your last post because the attachment contains the names of both the insurance company employee and your boss. This isn't a good idea.

 

Please take out any identifying details and repost.

 

HB

[momon121]

Sorry HoneyBee

 

I have reattached without names now

[unclebulgaria67]

Seems ok to me.

 

The valuation was only 5 years old, so it is only because of the banking crash and rush to buy gold that has caused the sharp increase in values.

 

This is a reminder to people reading this thread. If you have gold/silver or other precious items that have gone up in value in recent times, you should seek new valuations.

 

Probably a new valuation at least every 3 years would be about right. But when you get valuations, find out the approx weights in ounces, so you can check yourself whether prices have increased and Insurance values needs to be increased.

[momon121]

peace everyone. I have good news for you people thanks to you kind people the insurance is paying out which is valuation of gold they stipulated. Thank you much