Sunday, 27 January 2013

Making a Domestic Household Claim: What to expect

For my first post I thought I would begin with something most of us will have to do at some point, but can be difficult or include steps you might not expect. I'll refer to Insurance related things in this post (and future ones) but as time goes on will provide a post about the particular subject so don't worry if I mention something briefly which you don't understand.

This is the process (generally) for making a Domestic Household Claim, the process for Commercial claims is different and I may prepare a separate post about this at a later time.

Say you come home to find your house has been flooded or water from a neighboring property has leaked or escaped into yours.

 If the water has escaped from a neighbours property I would not suggest you get too hung up about it and insist on claiming from them directly and not through your Insurers. I will at a later date provide a post about claiming directly from a neighbour or business etc and the pro's and cons but personally I would not recommend it as you will almost always lose out somehow, be it the amount of money you receive or the length of time it takes.

The other thing to remember is that buy not claiming under your policy you are only saving the Insurer money, and not making use of the service you have paid for.

Instead we will assume you call your Insurer straight away (which is what you should do anyway) and report the damage and make a claim.

When you call the Insurers claims number you will be asked a range of standard questions about you, your property, the damage and its alleged cause. Some of the questions may not seem relevant (like how many rooms are in your house etc) but they all help the Insurer to better understand your position and the potential value of your claim. If the claim falls below a certain threshold the Insurer may just deal with the claim over the phone then and there and offer you a cash settlement of what they feel is an appropriate level minus your excess.

If the claim exceeds the call handlers authority level to settle over the phone the claim will, more often than not, be sent out to a Loss Adjuster to investigate and or handle. The person the claim is sent to may be referred to as a Loss Adjuster, Claims Adjuster or Claims Investigator or some variation on this. Their duties will always be broadly the same.

The Loss Adjuster which your claim is sent to will almost certainly work for a company other than your Insurer. So for instance you might be Insured with Aviva but someone from Crawfords might contact you. Most claims are now investigated and handled by Loss Adjusting companies who have a certain level of delegated authority to settle your claim on behalf of the Insurer. Your payment will however always come directly from the Insurer; Loss Adjusting companies do not issue or pay the claims themselves.

Commonly the Loss Adjuster will work for Crawford and Company, Cunningham Lindsey, Davies, G4S and numerous others. Don't be put off or worried by their involvement it, costs you nothing and they are simply the middle men who do the leg work for your Insurer.

When the Loss Adjuster contacts you in writing or by phone they will probably want to visit and inspect the damage, and your property,  for themselves. At this stage they will commonly check whether you require alternative accommodation or not, and send some paperwork to you for completion ahead of their visit.

I'll deal with alternative accommodation and whether you are entitled to it or not in a separate post.

A key piece of paperwork you will probably be sent will ask you to write down the value of all of  the items in each room of your house. This form is usually called a "Value at Risk" form.

 This will seem arduous and time consuming but is unavoidable.

 I have often met resistance from policyholders regarding this step, which is understandable, however if you do not complete the form your claim will almost certainly not move forwards. Basically the quicker you can complete this document the better it is for you.

Most people find this step a bit confusing as they are not claiming for all of the contents of their house and don't understand why they have to now go to the hassle of valuing everything in the property. The reason you have to complete this form is because when you took out your policy you will have told the Insurer that your Contents were worth a certain amount (£5000, £10,000 etc etc) and your Building was worth a certain amount as well.

Now that you are making a claim the Insurer wants to check that the amount of Contents and Buildings cover is sufficient. Basically they are looking to see if you really only have £10,000 worth of Contents or whether in reality your Contents are actually worth more than this.

If it transpires that your Contents are are worth a lot more than the level of cover you took out (for example your cover limit is £10,000, but your Contents are actually worth £20,000) then the Insurer will consider you under insured and this could affect your settlement amount in a variety of ways. ( I will deal with Under Insurance in a separate post)

If the Loss Adjuster visits your property he or she will probably look at your Value at Risk form during the visit and discuss it with you otherwise they may ask you to complete the form and email it to them before or after the meeting (this often depends solely on how the individual Adjuster manages cases). If they look at the form and think you have left items off the form they will discuss this with you and probably want to go around the house and make sure the list is accurate.

They will essentially "take a view" on the value you have written down and what they think the contents of your house are worth based on their professional experience. The thing to remember at this stage is that they are not interested in what you paid for the item, they are interested in what the item would cost to buy as new today as your Domestic policy will be settled on a new for old basis. So if you bought a sofa for £200 10 years ago, but it would cost £700 to replace today, the value of the item is £700.

Once the Value at Risk is agreed, and if it is within your policy limit the Loss Adjuster will explain how they will deal with the damage to your Buildings and Contents. If the building is damaged they will either instruct your Insurers preferred contractors to undertake repairs, or ask you to provide them with three quotes for the repairs.

There are pro's and cons of using the Insurers or your own contractor which I wont go into here as this post is just about what to expect initially.

The same applies for the replacement of contents, if you only have some damaged carpets or a single damaged  TV or similar, then the Loss Adjuster may offer to replace the item via the Insurers contractors or offer you the cash amount that the Insurer can buy the item for. In the alternative the Insurer may send a second company to value your carpets and provide a cheque in settlement. It is worth knowing that if you claim for carpets and not much else a contractor will usually be sent to value the carpets and then you are provided with a voucher which you can use to buy the carpets from set group of shops.

If you have suffered a major loss and you have lost a lot of contents you will be asked to prepare a list of the lost items and provide prices for the items yourself. The Loss Adjuster will then review the list and negotiate settlement with you. Often Insurers will provide the assistance of a contractor in drawing up the list of items, but more often than not you will have to indicate yourself how much you think each item will cost to replace.

Obviously all of this will not all take place at a single visit (unless you have a very small claim) but over a matter of days, weeks or months depending on the size of your claim.

I know that's rather a long post, but broadly speaking that is what to expect when you make a claim in terms of procedure and how it is likely to be handled. There may be some variation depending on the size and type of claim you make but that's the broad procedure for Domestic Property Claims.

In other posts to follow I will go into more depth about a number of the things I have mentioned above, such as under-insurance, value at risk, contractors etc. I will probably also write posts about what is a Loss Adjuster, what is a Loss Adjusting company etc.

Hope that was helpful to someone and I'll try and get some more posts up in the next few days.

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