Case Studies - Insurance Disputes Involving Personal Possessions
We're showing these high value contents insurance case studies with the kind permission of the Financial Ombudsman Service Limited. You can get more details of what the Financial Ombudsman does for customers at www.financial-ombudsman.org.ukEach high value contents insurance case shows the issues that can arise due to disputes over valuations. Sometimes the customer wins the dispute, but by their nature, disputes are time consuming and stressful.
Dovetail can help you can avoid this kind of hassle by understanding your particular needs and getting you the right level of insurance cover for your high value contents.
Case 1 - Damaged camera valued at £4,000 exceeded the
policy limit of £1,500
Case 2 - Stolen electricity generator
Case
3 - Stolen computer not covered away from the home
Case
4 - Furniture destroyed by fire in a storage facility
Case
5 - Bag stolen from parked car
Case 6 - Sunglasses
stolen from parked car
Case
1 - Damaged camera valued at £4,000 exceeded the policy limit of £1,500
A
customer will not be able to recover the full amount of claim under the contents
insurance policy if the value of the damaged property exceeds the policy limit.
In this case, the firm has the right to accept or reject a customer's claim for
the balance under his purchase protection policy. Let’s look at a real case study.
Mr. K accidentally dropped and damaged his new camera one afternoon when he was taking pictures of his family at a local carnival. The camera was worth about £4,000 and Mr. K put in a claim under his household contents policy. He had paid an additional premium on this insurance policy to obtain cover for his personal possessions while they were outside the home.
Mr. K's contents
insurer accepted the claim. However, it only paid him £1,500, as this was the
policy limit. Mr. K then tried to obtain the balance from his purchase protection
insurer (firm C). Firm C rejected the claim on the grounds that its policy contained
the following exclusion: ‘ This policy does not cover… loss or damage insured
under any other policy or which would have been insured under another policy but
for the application of a policy excess. ' Mr. K then complained to us.
Dovetail
Comments
Had he insured himself under a high value contents insurance policy,
he could have avoided having to claim on two policies and the inconvenience of
complaining.
Complaint upheld
The clause in this particular policy
was similar to that found in many types of policies. We consider the purpose of
such clauses is to prevent policyholders making a ‘ double recovery ' (claiming
for the full amount of the same claim – from two different insurers). We did not
consider the clause to be inherently unfair or unreasonable, provided the firm
applied it appropriately, so as not to exclude genuine losses that were otherwise
uninsured.
Mr. K had recovered only part of his actual loss from the contents
insurer. We therefore considered that it was fair and reasonable for him to ask
firm C to cover the balance – and for it to do so, subject to the policy excess
and limit.
Case 2 - Stolen
Electricity Generator
When Mr. J's electricity generator of high value was stolen from a local stable, where it was being kept temporarily while in use, he made an insurance claim under his household policy.
The firm promptly rejected the insurance claim on the grounds that the generator was not covered when it was outside the home. The only ‘personal possessions' that the insurance policy covered outside the home were ‘Items which you… would wear or carry around for personal use, adornment or convenience …'. Mr. J then complained to us.
Complaint rejected
We felt that the firm's insurance policy definition was worded sufficiently clearly to exclude Mr. J's claim. The firm intended only to cover certain sorts of items – those that were portable. It could not reasonably be said that a bulky electricity generator was an item that you would carry around for ‘personal use or convenience '. We therefore rejected the insurance claim.
Dovetail Comments
Had he insured himself under a high value contents insurance policy, Mr. J would probably have claimed successfully.
Case 3 - Stolen
computer not covered away from the home
Miss. G took her personal computer with her when she went to stay with a friend for a few weeks. The computer was a standard desk-top model of high value but not a laptop. There was a break-in at the friend's house shortly after Miss G arrived and the computer was stolen.
Miss. G put in an insurance claim under the ‘personal possessions ' section of her household policy but the insurance firm turned it down. It deemed that her computer did not fall within the policy definition of ‘ personal belongings ' which listed ‘ Clothing and Personal Effects (including clothing, jewellery, watches, furs, binoculars, musical, photographic and sports equipment) '. Miss. G then complained to us.
Dovetail Comments
Had she insured herself under a high value contents insurance policy, Miss. G would probably have claimed successfully.
Complaint upheld
We decided that if the firm intended only to cover personal belongings that were designed to be portable, or that were customarily carried about the person, then it should have said so in plain language in the insurance policy.
We pointed out that the contents of the insurance policy definition included musical instruments. Some musical instruments, such as pianos, are not usually considered ‘portable '. However, the policy did not make any distinction between ‘portable’ and ‘non-portable' instruments. So non-portable items could fall within the insurance policy’s definition of ‘personal belongings '. The computer was a possession that was personally owned by Miss. G. Since the policy did not specifically exclude computers, we decided the fair and reasonable solution was for the firm to pay the claim.
Case
4 - Furniture destroyed by fire in a storage facility
Mrs. A put her furniture into storage while she was having renovations carried out after moving home. Unfortunately, all her furniture was destroyed when the storage facility burnt down. The owners of the facility held no insurance and had been declared bankrupt, so Mrs. A put in a claim under her household insurance policy for £50,000.
Her policy covered her against loss or damage for ‘ personal possessions temporarily away from the home '. However, there was an exclusion that said items were not covered while they were stored in a ‘ furniture depository '. The firm cited this exclusion to turn down Mrs. A's claim.
Mrs. A argued that the storage facility was not a ‘ furniture depository ', but the firm still refused to pay the claim. However, it did offer her a goodwill payment of £5,000.
Complaint rejected
We decided that a ‘storage facility ' fell within the ambit of the phrase ‘furniture depository'. It was a place where furniture was deposited. We did not agree with Mrs. A that because items other than furniture could be stored there, it could not be defined as a ‘furniture depository '. We concluded that the insurance firm was not liable to meet the claim and that its goodwill payment had been very fair.
Dovetail Comments
Had she insured herself under a high value contents insurance policy, Mrs. A would probably have recovered all, or at the very least, a significant proportion of her losses
Case
5 - Bag stolen from parked car
Mr. D and his wife left their car in the car park while they were visiting a stately home one afternoon. They returned to the car later in the day to find that a thief had broken into it and stolen Mrs. D's handbag which had contents of high value. She had left the bag on the front seat, covered with a coat.
Mr. D made a claim under the personal possessions section of his household insurance policy. However, the firm said it would not meet the insurance claim because the handbag had not been left in ‘a locked and concealed boot, concealed luggage compartment or closed glove compartment ', as mentioned in the contents of the terms of the policy.
Complaint rejected
The insurance policy exclusion had been very clearly stated and it was evident that the bag had not been left in a ‘secure concealed compartment '. The handbag could easily have been left in the boot. Even though the bag had been covered with a coat, it would have been obvious to an opportunistic thief that the coat could be hiding something worth stealing. We decided the firm acted reasonably in turning down this claim and we rejected the complaint.
Dovetail Comments
Had they insured under a high value contents insurance policy, Mr. and Mrs. D would probably have claimed successfully.
Case 6 - Sunglasses
stolen from parked car
When Mrs. M returned to her parked car after a brief shopping trip, she found that a thief had broken into her car. The designer high value sunglasses that she had left in the pocket of the door nearest the driver's seat had been stolen.
Mrs. M put in a claim under the personal possessions section of her household insurance policy but the insurance firm turned it down. It reasoned that this was because the sunglasses had not been left in ‘a concealed luggage compartment or closed glove compartment '. Mrs. M then complained to us.
Dovetail Comments
Had she insured herself under a high value contents insurance policy, Mrs. M would probably have claimed successfully.
Complaint upheld
We considered that, strictly speaking, Mrs. M's claim fell foul
of the exclusion clause. However, we felt the firm's decision was less than fair
and reasonable because the sunglasses had effectively been concealed from view.
They would not have been visible to a passing thief and the door pocket was, in
many ways, similar to a glove compartment. This thief just happened to strike
lucky when he broke into the car. We therefore decided that the firm should pay
the insurance claim.
Dovetail Insurance Services Ltd
Maple House, Bayshill Road,
Cheltenham, Glos, GL50 3AW. UK
