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Escape of water
Over the past year or so we have been trying to draw attention to the flaws in the property insurance industry’s growing reliance on surveyor networks and cash settlements.
Recently we have come across an insurance claim that has demonstrated very poor customer service and caused damage to an insurer’s reputation. The policyholders have agreed to let us share this story with you.
On 15th July 2015 Dr & Mrs O had a small escape of water from a sink upstairs. A hidden build up of water under the bedroom floorboards had finally burst through the dining room ceiling, creating a hole in the ceiling and causing water damage to the original solid wooden floor in the dining room, dating from 1959.
Dr & Mrs O completed MA Assist’s Home Insurance Repair Estimator (HIRE) which created a claim estimate of around £2,200.
They contacted their insurer to make a property insurance claim as soon as they could. Their insurer arranged for a visit by a surveyor for 22nd July.
A surveyor from a well-known, nationwide surveying company arrived as arranged on 22nd July.
He spent 1 hour 15 minutes carrying out the survey. At the end of the survey he told the policyholders that he could offer a cash settlement of around £500 to mend the hole in the ceiling and that he would need to appoint a flooring specialist to examine the floor. At no point did the surveyor:
> explain how he came to £500, and whether this was after or before the deduction of the £350 excess.
> provide the policyholders with any paperwork showing the schedule of works that made up the £500.
> explain their options – a cash settlement was the only solution offered throughout the claim.
> supply any information, written or spoken, about how the claim would progress, the risks and benefits of the options available to them and what would happen next.
Dr & Mrs O immediately rejected the cash settlement as they knew that in their expensive area of the South East £500 was completely insufficient to get the repair done to the ceiling. The surveyor then informed them that they would have to get two quotes from builders and simply passed them his tablet and asked them to sign in a box. They still have no idea what they signed!
Dr & Mrs O contacted two local builders to get quotes done for the repairs. This took time to arrange and was hugely inconvenient. They had not obtained the written quotes before they went on holiday for two weeks during August 2015.
When they returned from their holiday a letter from the surveying company was waiting for them. It stated that they had been unable to get in touch with Dr & Mrs O by telephone or email, so if they heard nothing more from them they would close the claim within 14 days of the letter. Dr & Mrs O quickly emailed the surveying company with an update, asking them not to close the claim.
This is a shocking service to provide to an insurer’s customer. Not only had the customers had to do all of the work, but were also being told they hadn’t done it quickly enough and the property insurance claim would be closed if they didn’t get a move on!
The policyholders finally received the written quotes from the builders (busy builders who were not paid to prepare the quotes and had no expectations of getting any work from them) and sent the two quotes to the surveying company on 1st September. The quotes were for £2,382 and £2,742 and set out the works required in detail.
Dr & Mrs O received the following response:
“Thank you for your estimates. Please be advised these have been reviewed in house and we can respond as follows – In this instance we would also require the estimates to be broken down into material costs/labour costs/hours line by line.”
Even though a surveyor had already visited the property and taken photographs and dimensions, the surveying company still did not feel they had sufficient information to determine whether the quotes were reasonable!
Not surprisingly Dr & Mrs O did not wish to go back to their builders and ask them to do more work for the surveying company. They submitted a strongly worded complaint to their insurer, and the claim was finally settled for £2,382 less the excess.
Criminal offence and FCA breach?
In out opinion this story demonstrates several breaches of regulations and guidelines:
Under the Consumer Protection from Unfair Trading Regulations 2008, insufficient information was given to the policyholders for them to take an informed decision. Misleading omissions took place: no information was provided about their options and what the risks and benefits would be for each of the options available. Also no information was provided on how the cash settlement was calculated.
This in itself can be a criminal offence, but to effectively force a consumer to accept a cash settlement, particularly where the insurance contract allows for other remedies, could be considered an aggressive practice which is a criminal offence too.
The surveying company seemed to hold no regard for the complaints unheld by the FOS on inadequate cash settlements, nor the FCA’s thematic reviews around the claim experience, in relation to cash settlements. The FCA has stated several times that if the policyholder can’t get the work done for the value of the cash settlement he or she has the right to go back to the insurer to ask for a better settlement.
MA Assist is helping Dr & Mrs O with the repairs. Mrs O said “that hole in our ceiling has been like a hole in the head, thank you MA Assist for helping get rid of my headache!”