Like most businesses, Insurance companies exist to make a profit and return for their shareholders and investors. Claims are by far their biggest financial cost and it should come as no surprise insurers will always be looking for ways to reduce and minimise their claims costs.
Most insurers employ their own claims handlers and/or loss adjusters to settle claims. Neither are independent and impartial and are often incentivised to decline uncertain claims and/or minimise claim settlement costs even if this appears completely unfair and unreasonable to the insured party.
Most claims are subject to a policy excess. This is the amount which is deducted from a claim and is intended to be the Policyholders contribution towards the costs of the claim. The excess amount is usually governed by the claims type i.e. water damage claims usually have a minimum £250 excess.
Excess levels can often be increased or reduced by the payment of increased premiums negotiated at the commencement of the policy the intention being to encourage Policyholders to accept more risk in the hope they will be more careful (and thus reduce or dissuade claims being made) in return for a lower premium.
Claims come in all shapes and sizes. The intention of an insurance policy is to provide cover for loss and damage arising from an unforeseen uncontrollable accident such as a storm.
However, this basic understanding becomes blurred in more complex situations such as water damage resulting from pipework installed by say an inexperienced plumber where it could be argued that the incident was foreseeable and the result of [the plumbers] negligence and thus not an accident and therefore would not have occurred had a competent plumber been engaged.
However, unless the insurer can establish a clear case of negligence and/or some form of a deliberate act on the part of the insured party, in such situations the insurer would be expected to accept and deal with the claim. However, in these claim situations, insurers are able to exercise their rights of subrogation [to adopt the Policyholders legal position] and pursue a recovery of the claim costs from a negligent third party.
When exercising their rights of subrogation, an insurer is able to pursue their insured costs but they must also allow their Policyholders to include and/or pursue their uninsured costs such as the policy excess as part of the claim against the third party.
As with all walks of life, things can and often do go wrong in the insurance world especially when it comes to claims which after all is the only real benefit an insured party can derive from their insurance contract. As mentioned above, adequacy of the sums insured becomes very important at the point of claim where insurers can and usually do look to reduce payments if the sum insured is insufficient.
This is not so much of a concern with a small claim but imagine if water leakage from tanks in the roof brought down ceilings seriously damaging your bathroom and kitchen – a 25% reduction of £1,000 claim is infinitely more manageable than a 25% reduction of a £20,000 claim.
Another classic situation is when insurers accept claims only for their claims handlers and loss adjusters to say that aspects of the claim are excluded due to old age/wear and tear or had been damaged by a separate matter not covered by the policy.
Another particular loss adjuster favourite is to deny the re-decoration of a complete room in situations where say only 1 or 2 walls have been damaged.
Although statutory regulation governs much of the rules and ways insurers are supposed to operate in today’s financial services world, many insured people simply don’t have the time, inclination or wherewithal to challenge their insurer’s unfair claims handling practice and usually accept the meagre settlement options being offered.
Insurers are of course well aware of this and don’t usually hesitate to take advantage of a competitive claims settlement situation whenever they can.
This is where we can help where we have over 25 years of unrivalled experience of buildings insurance matters having worked with insurers, their claims handlers and loss adjusters. We, therefore, know about their often sharp and unfair practices and the effects this has on property owners who do not know where to turn for advice and have the time and energy to fight for a fair claim settlement.
Working with experienced independent experts, we are able to fight for insured people who have been unfairly treated and use our expertise and experience to get a fair and reasonable improved claim settlement.
The Claims Group – The disputed buildings insurance claim specialists.
Over 25 years of unrivalled experience in buildings insurance matters, having worked with insurers, their claims handlers and loss adjusters.