Regular readers of this column will know that, apart from occasional asides about TV programmes, books I may have read or references to an abiding passion for Italian scooters, I don’t often write about my own financial problems in any great detail.
Generally, my view is that while it may be appropriate to refer to personal financial dilemmas in the context of a wider debate about topics relevant to IFAs, washing one’s financial linen in public is usually a step too far.
I hope, however, to be granted a small indulgence this week, if only because my experience over the past few months may offer an insight into how the financial services industry treats the general public.
In my case, the issue is with my general insurer. As I’ve indicated before, a fire at our thatched cottage in December last year gutted the property although the four walls were left standing.
The insurer, Ageas, accepted liability for the damage and we started planning for the rebuild.
Clearly, a key issue was whether we were fully insured. If we weren’t, Ageas might seek to impose “averaging”, reducing any sum available for the restoration by a percentage equal to the amount we were under-insured by.
Luckily for us, the company’s loss adjuster informed me that, having considered the issue carefully, he felt we were not underinsured to the point where averaging might be required. Armed with this information, which I wrote about in a national newspaper and which has never been repudiated by the insurer, we set about the process of putting the work out to tender.
At this point, the first bombshell: after weeks of delays by Ageas, the adjuster informed us he wanted to impose a £100,000 deduction from the sum insured to reflect the fact that the cottage’s four walls were still standing.
There is no reference in the policy, or in any other document supplied to us by our insurer, that distinguishes between the amount payable for a full rebuild of the property and its partial refurbishment.
Apart from anything else, to introduce any such limit would allow the insurer potentially to walk away from meeting the costs of a full refurbishment of a property where a ground-up rebuild is not required.
This is because in some cases the cost of a full restoration/refurbishment, while still below the sum insured, can be higher than a full rebuild, if only because VAT is not reclaimable. Plus, some costs in a partial restoration, such as long-term scaffolding to protect the remaining structure, do not apply to a full rebuild.
I immediately wrote back to the adjuster making these points and saying we wanted a formal response from the insurer within eight weeks before considering whether to take the issue to the FOS.
Almost eight weeks in and no response has been received, which hopefully means that Ageas has abandoned that particular line.
If so, that would be a wise decision as a lawyer with long experience in insurance litigation told me last week its attempt to impose such a deduction has no legal basis. Either way, unless we hear from Ageas, we will refer it to the FOS ourselves.
Not that the company has stopped trying. Last week Ageas informed us it was prepared to accept the cheapest quote to refurbish our property – a quote that falls well within the maximum sum insured. We told the builder it was all systems go.
The sting in the tail came days later when the adjuster sent us a letter offering a cash settlement but without any contingency in the event of potential rebuild problems. Ageas previously told us it had concerns about the absence of a contingency in the builder’s quote. No longer, it seems.
If we don’t accept, the adjuster informed us that Ageas might impose “averaging” on the rebuild process after all – having said we were not under-insured just six months ago.
This, potentially, is what is known as “estoppel by representation”, where we entered into a contract having relied on an earlier statement by the insurer which it made no attempt to correct, despite having repeated opportunities to do so.
The lawyer I spoke to tells me Ageas’ tactics are common within the industry.
The hope is that if the claimant is a mug, he or she will give in. The point in telling this story is not to seek sympathy from readers, quite the reverse. I have a reasonable understanding of home insurance processes and know what steps to take next.
Ironically, Ageas and my loss adjuster are aware of this. Yet they are still working hard to chip away at what we are entitled to despite knowing that of all the people to pick a fight with, I’m definitely not that person.
Which makes me wonder how insurers treat the hundreds of thousands of less experienced policyholders who are unfortunate enough to claim under their contracts.
As I have argued before, IFAs are among the least blameworthy of all groups operating within the financial services industry but they end up tainted by those with whom consumers are more likely to come into contact with on a regular basis.
Insurers, meanwhile, wonder why the public don’t trust them. It’s not hard to see why.
Nic Cicutti can be contacted at firstname.lastname@example.org