Fiona and Eleanor complains when their insurer refused to pay because of underinsuring.
What happened
Fiona wanted to insure her more financially and sentimentally valuable contents of her home. She lacked confidence when it came to finances, so she asked her daughter Eleanor to help.
Eleanor did a bit of research. She asked her mum what some of the more expensive items in the house were, and looked online to find out how much they were probably worth.
She then searched for and found a policy online and filled in the online form.
Unfortunately, Fiona's home was broken into later that year and she called the insurer to make a claim.
While visiting, the insurer’s loss adjuster gathered evidence for the stolen items. He provided a report to the insurer a month later. He was satisfied a theft had occurred and Fiona had owned the items she was claiming for. But he was concerned the contents of Fiona’s home had been considerably underinsured.
Fiona had cover in place for up to £10,000 worth of high value items, such as jewellery, but the report valued the missing jewellery at around £100,000 – and all Fiona’s contents at £150,000.
When the insurer received the report, they concluded that Eleanor hadn’t told them the true value of Fiona’s possessions. They said that if they’d known the true cost of replacing everything they wouldn’t have initially offered insurance. So they cancelled the policy and declined the claim.
Eleanor complained as she said she'd been honest. She said that it had never occurred to her that claiming an amount less than the jewellery was worth would mean the insurer would pay nothing at all.
The insurer wouldn’t change their mind so Eleanor made a complaint to us on Fiona’s behalf.
What we said
We asked the insurer for screenshots of the questions it had asked during the online application. We also asked Eleanor to explain what steps she took to answer the question reasonably.
When we received the screenshots, we realised what had happened. On the form there was the question: ‘what is the total value of the contents to be insured?’
There was a ‘further information’ box in small print, placed a considerable distance from the question, and which only appeared if the customer hovered over an icon. It explained Eleanor should value all of the contents at home.
Eleanor had understood the question to mean, ‘what’s the total value of the contents you want to be insured?’, and hadn’t seen the optional box with further information.
She said Fiona was happy to take the risk that not all her contents would be insured but £10,000 of the jewellery was really special to her – and that’s what she wanted to insure. The insurer told us it had meant ‘what’s the total value of all the contents in your home?’
We decided that the question wasn’t clear enough that Eleanor had to value all of the contents. And we were satisfied it could be interpreted in the way Eleanor had, so her answer was reasonable.
Also, we couldn’t see any efforts by the insurer to warn Eleanor or Fiona about the consequences of underinsurance.
We thought that if this question had been clearer and Eleanor warned about the consequences of underinsurance, she would have acted differently.
We said the insurer should:
- reinstate the policy and reconsider Fiona’s claim, bearing in mind the existing limits in the policy
- remove any references to Fiona having a policy ‘voided’ or cancelled
- pay Fiona £200 in compensation for the distress and inconvenience caused