Floods, fires and accidents: are you prepared for disasters?
Insurance is big business. Just over 20.1 million households in the UK had contents insurance in 2012, while 17 million had buildings insurance. Collectively, insurers paid out £8.1 million a day in property-related claims last year, the majority (24%) for "escape of water" - also known as flooding – while 15% were made for fire.
But amid all these statistics are people, often struggling in difficult circumstances, trying to get on with the lives they were living before disaster struck.
Here, we detail exactly how the insurance process works when you suffer an unexpected disaster that requires a claim, along with the lessons you should learn in case it happens to you.
The house fire
Nick Molho, chief executive of an environmental group, his wife Rachel, a charity fundraiser, and their six-month-old son Ben experienced a house fire in their rented home near Godalming, Surrey, in 2012. Here, Nick explains what happened and exactly how the insurance claims process went.
In 2012, we had a fire in our kitchen. Rachel had finished feeding our then six-month-old son, Ben, and took him out of his highchair. She put his plastic tray on the hob, which was off, but then accidentally turned it on.
She went upstairs to change Ben's nappy and then the smoke alarm went off. By the time she got downstairs the kitchen was full of smoke, so she shut the nearest door and called the fire service.
It took six minutes for them to arrive but in that time every room except the living room was blackened because of the thick, black smoke caused by the melting plastic. Within five minutes of the firemen telling me it was safe, I was in the house looking for my insurance documents and then calling someone.
We were renting the house at the time, so didn't need any buildings insurance but we had contents insurance with Barclays (sub-contracted to Aviva) covering up to £20,000 worth of possessions. We thought this was more than enough. However, the insurer later told us that the £20,000 covered everything in the house and not just the contents that were damaged.
We've since realised that you really want to make sure the value of your insured items is comfortably above the real value of your belongings. You'll be surprised how quickly even insignificant things mount up and the value of what you've got is usually much more than you'd think.
The fire happened on a Thursday evening and we spent that night at a friend's house. But the next day, we had no idea where we would sleep, and with a six-month old this was a huge concern. We found that our policy covered us for £10,000 worth of temporary accommodation but when we rang on the Friday, the company told us they could not sort anything out until Monday - leaving us homeless for the whole weekend.
I found a short-term let in our village and had to push extremely hard for the insurer to agree to cover it, which it eventually did at 4pm that day. However, I had to call again on Monday morning to get it to agree to cover another week's worth of accommodation. This happened every week for seven weeks, with us eventually living in four different flats with our baby.
Each time we had to chase the insurer to pay the owners of the short-term flats we were renting, and this took up a lot of time.
The day after the fire, the insurer sent professional cleaners to clear out all our belongings and clean them. They replaced all the big-value items quickly, such as our son's buggy, but not the smaller value items. We had to chase and chase for the rest and eventually went to the Financial Ombudsman Service (FOS) to get the remainder of the money we were entitled to.
It seemed to us that the insurer constantly delayed paying what it was required to under the terms and conditions of our insurance policy, to the point where most people would have given up. The FOS pressured Barclays and it eventually paid all the money as well as £500 in compensation.
Another issue was that Barclays tried to tell us that we shouldn't be paying rent to our landlady – wrongly.
It forced us to raise the issue with our landlady, which inevitably led to difficulties as we had already damaged the flat with the fire and now we were telling her that we wouldn't pay the rent. Barclays was wrong on this as our contract with the landlady had nothing to do with our insurance policy. Barclays was just looking for ways to reduce its own liability, by deducting the rent money off what we were paying for the short-term lets – but it wasn't helpful for our relationship with our landlady.
All in all, it took six months from the date of the fire to get all the money from the insurer and it really tired us out. It's a painful process and I would advise anyone going through it to use the FOS to speed things up.
Jonathan Clark and his wife Christine had a burst pipe that caused a "disastrous flood" in their property in Leyland, Lancashire in early December 2012.
We were alerted to the problem by a neighbour. The cause of the incident was a burst cold-water pipe in the loft. We bought our insurance through a broker, which we contacted on the day we found out about the incident. The broker immediately informed the insurer who arranged for a loss adjuster to visit our property.
The adjuster met me at the property a few days later and confirmed there was a claim and that I could take up the floor downstairs and bring in some drying gear (such as dehumidifiers) to help dry out the floor downstairs and carpets upstairs. I arranged for some equipment but I was unaware exactly which machines to get, how many or what would be an acceptable amount to spend.
I was also getting increasingly concerned that, with such considerable damage to the property, I couldn't make the most successful claim on my own. A friend in the building trade told me that it might be worth consulting a professional to represent me and help complete my insurance claim.
After some research, I approached Cherry & Griffiths insurance loss assessors, who I instructed on 3 January 2013 to administer the claim on our behalf.
From that point, the entire claim was negotiated by Cherry & Griffiths. Industrial drying equipment was installed and a survey of the property carried out immediately.
There was far more to do for the insurance claim than we ever anticipated and the extent of damage and work needed was well beyond what we thought.
The claim was successfully negotiated, with liability accepted. Then the team at Cherry & Griffiths sorted out the tendering, pre-contract meetings and all works completed at the property. The flood was devastating, and one thing I've learnt from it is to always seek professional advice.
The building works were finished by mid-April, with the entire first floor replastered, ceilings dropped, as well as a new kitchen installed downstairs. A seemingly small leak can do a lot of damage.
The personal injury
Michael Smith, a 43-year-old retail manager, suffered a broken ankle when he tripped on a loose paving slab in 2012. As a result, he was offered an apology from the local council.
Like everyone, I'd seen adverts on TV for claims companies promising to get you money for personal injuries but I didn't go down this route. After I fell over, I knew I was in trouble immediately and so when some passers-by stopped to help, I asked them if they would use my phone to take some pictures of the pavement where I'd tripped.
It was clearly jutting out at a weird angle and must have been like it for some time. I must have completely missed it while walking along, minding my own business.
I was rushed to hospital where my ankle was set in a cast. I had about three weeks off work but this was on full pay so I didn't suffer financially. That said, I did want the council to know what had happened.
I complained to the council, sending in photos from my phone. It took three months for the council to come back with a response I was happy with. Eventually, someone held their hands up and said, "yes, it was our fault".
The problem was to do with whether the council was aware of the paving slab or not. For a long time it was unclear whether it knew about it and I was getting mixed messages about whether someone had previously reported a loose paving slab to the council.
In the end, I got my apology and I think that's enough for me. I could still go down the legal route, and I am thinking about it but there's a time limit for bringing legal action and I'm getting close to it.The apology aside, it was very satisfying to see workmen replacing the loose slab soon after my accident.
Making a claim
Don't be afraid to ask for help. If you are struggling with a claim on your own, or you feel your claim is not being dealt with properly, contact the Financial Ombudsman Service (FOS) for help.
- Talk to the business first. The insurer you're unhappy with has to have a chance to fix your problem before the ombudsman can get involved. It has up to eight weeks to sort things out for you.
- If you've not heard anything, or are still unhappy, talk to the ombudsman as it can contact your insurer for you, Call the FOS on 0800 023 4 567 (Monday to Friday 8am-8pm; Saturday 9am to 1pm).
Insurance claims specialists that investigate contentious claims on behalf of insurance companies or policyholders. They investigate at the scene of an incident and establish the causes of the ‘loss’ (damage or destruction of property) and whether it is covered by the insurance policy. They then write reports for the insurer, assessing the validity of the claim and recommend if the insurer should pay out and, if so, how much.
If you’ve have a complaint about a financial service product you have bought but the company you bought it from refuses to resolve your problem after eight weeks, the Ombudsman can help. The Ombudsman will investigate and resolve the matter. The Ombudsman is independent and its service is free to consumers. The Ombudsman may find in the company’s favour but consumers don’t have accept its decision and are always free to go to court instead. But if they do accept an Ombudsman’s decision, it is binding both on them and on the business.
Does exactly what it says on the tin: covers the contents of your home for theft and damage and also may insure certain possessions (jewellery, cycles) outside of the home. Things to watch for include the excess and also the maximum payout on individual items. Another grey area is kitchen fittings, as some contents policies say these are not contents but part of the fabric of the property and covered by buildings insurance and some buildings policies don’t cover them because they regard them as contents.
This type of insurance covers the structure and fabric of your property – the bricks and mortar, not the contents (for which you need contents or home insurance). If you have a mortgage, the lender will insist you have a suitable buildings insurance policy in place. Many lenders offer their own building insurance policies, but you don’t have to buy it from your own lender but you have the option of shopping around. The insurance covers you for the rebuilding costs, not the market value of the property.