How the Ombudsman Handles Home Insurance Claims

How home insurance claims are handled often causes disagreements between homeowners and their insurers. In many cases, the Financial Ombudsman is called in to referee the dispute.

To help make guidelines for settling cases clearer, the ombudsman has decided to make the thinking behind settling claims clearer.

New for old repairs

Most home insurance policies have ‘new for old’ cover that lets the insurer decide whether a claim is settled by replacement, repair or cash compensation. In some cases, the ombudsman looks at whether the insurer has made the right decision for the home owner’s benefit.

If home insurers opt for a repair, the ombudsman feels the insurer should pay to put the repair right if they have chosen the firm undertaking the work – and the opposite if the policyholder has chosen the repairer.

This is more complicated when the insurer has asked for quotes and the policyholder has asked the insurer’s loss adjuster to help find the estimates. In this case, generally, the ombudsman will make the insurer pay if the repairs go wrong.

Even if the repairer was chosen by the claimant, if the repair goes wrong and the insurer controlled the work by specifying materials etc, the bill lands with the insurer.

Replacing sentimental or special possessions

Replacement is a contentious issue for many policyholders. The ombudsman’s view is that if the item is jewellery that is antique or specially-commissioned, then it would be unfair for the insurer to insist on the policyholder buying a modern substitute from a major high-street retailer.

In such cases, the ombudsman usually lets policyholders choose where they buy a replacement and they are entitled to a cash settlement (without deducting a discount) if they cannot find an acceptable replacement.

Replacing day-to-day belongings

Where a reasonable replacement can be obtained from a high-street retailer, insurers often specify which one – because they have a discount arrangement with that particular retailer.

This is reasonable if the consumer lives within easy travelling distance of that retailer – and the retailer can provide a reasonable replacement.

Similar issues arise if the insurer offers vouchers that can only be exchanged for goods sold by a particular retailer.

Home insurance cash settlements

Sometimes, policyholders prefer a cash settlement even though there is no practical reason why they could not visit the insurer’s preferred retailer – and that retailer is able to provide a reasonable replacement.

In these cases, the ombudsman considers deducting any discount the insurer would have received is not unreasonable.

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4 Responses to How the Ombudsman Handles Home Insurance Claims

  1. Lyda Rust says:

    Could we please have a contact number for help with a insurance claim for smoke damage to a bed room that has been ongoing for nearly thee months and not near to settlement thanks l rust

  2. noola says:

    dispute with Towergate water ingress due to excessive snow in winter, they dispute the damage was storm damage. the roof was repaired in the summer and some further damage occured in the drying out process. My house is flat roofed grade 2 listed property in excellent repair. The damage has been inacurately assessed by Imperial consultants who deny the claim. I have been in telephone conversations with Towergate who are very difficult to get hold of and they have told me that I was insured and the assessor was not given correct information. Then they deny that I am insured for internal damage.

  3. Glenis Keyworth says:

    I would like an address please to complain about insurance sold on furniture, but then does not insure the fault with the furniture

  4. Ann B says:

    In dispute with insurance company over their suppliers, independant inspectors and farcroft, who independant sent two antique items of furniture to farcroft one walnut one oak to be restored, after being damaged by carpet fitters, farcroft restored both items to mahogany! walnut china cabinet is ruined, and the oak welsh dresser well you have never seen such a mess. but they say it looks ok to them. also the other two damaged items in their opinion well they were only MFI or woolies or somthing so accept the two hundred pound…. yeah right. help please Ann

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