CREDIT: CHARLOTTE GRAHAM
The average insurance payout for domestic fires and explosions has increased by a third in two years – leading to allegations that insurers are now challenging aspects of homeowners’ claims and seeking to limit payouts as much as possible.
That was certainly the experience of homeowner Matthew Tidmarsh, who was initially offered a settlement of £25,000 by Millennium Insurance, the underwriter of his Paragon Car Ltd policy, when his four-bed family home near Huddersfield was destroyed by a fire in April 2015.
Following a two-year battle and pressure from the Financial Ombudsman – the watchdog which arbitrates when consumers and companies cannot agree – Millennium was ordered to settle the claim with a £33,554 payout, plus 8pc interest and £350 compensation. This was paid in June this year.
On April 10 2015, Mr Tidmarsh’s neighbour called him at work to tell him his house was on fire. It was the day before his daughter Elinor’s 11th birthday.
By the time he rushed home the blaze had been extinguished by two fire engines.
It later transpired that the washing machine under the stairs had caught alight while Mr Tidmarsh’s wife, Emma, was shopping. Luckily, no one was in the house at the time – even the two cats escaped unharmed.
The couple and their three children went to stay with Mr Tidmarsh’s parents who lived 10 miles away.
The insurance company was contacted and a loss adjuster was organised to visit the property the following Monday to evaluate the extent of the damage and recommend the sum of the payout.
That same Saturday, Mr Tidmarsh had also been contacted by a independent loss assessor, Harris Balcombe, which had found out about the fire in the local press.
It too wanted to visit the property and offer an estimate of the cost of the damage.
Mr Tidmarsh said he was suspicious at first and said he felt like he had been targeted in the same way as with “ambulance chasers”, personal injury lawyers who contact people after they’ve been in an accident. However he agreed to let the firm visit the site.
Both parties assessed the damage and estimated what it would cost to replace and repair.
Harris Balcombe suggested it would cost £35,000 to put Mr Tidmarsh’s home right and submitted the claim in September that year. Millennium offered £25,000.
Deductions based on wear and tear, and depreciation were applied by the loss adjuster – especially where clothing was concerned. This was between 40pc and 70pc, according to the ombudsman.
Millennium, which is based in Gibralter, increased its offer to £27,500 but Mr Tidmarsh was still unsatisfied.
For the next nine months, Mr Tidmarsh said there was a “tortuous” back and forth between Harris Balcombe and Milliennium with both trying to convince the other they had valued the claim correctly. For seven of those months, the family lived in a mobile home they parked outside both Mr and Mrs Tidmarsh’s parents’ homes.
In August 2016, almost a year after the claim was submitted, the case was eventually taken to the ombudsman.
The following April the ombudsman officiating in the case, Ray Lawley, ruled in Mr Tidmarsh’s favour and ordered Millennium to pay £33,554 plus 8pc interest. He also told the firm to pay £350 compensation and half the loss assessor’s fee, because he felt Mr Tidmarsh had little choice but to use one.
Mr Lawley wrote: “The whole settlement offered seems to me to be based on a general assumption rather than anything that applied specifically to Mr Tidmarsh’s claim. The same applies to the deduction for wear and tear.”
The failure to produce the valuation list so Mr Tidmarsh could challenge specific items, the delays and the fact Millennium could not justify its claim were all taken into account.
Mr Tidmarsh said the whole experience has made him think differently about insurance firms.
He said: “It’s all fine when you’re paying premiums – insurers make you feel like they’re your friend and they’ll look after you.
“But the minute you need to claim, you’re just a number, and it feels like they’ll do their darndest to give you as little as possible.”
James Daley, founder of consumer group Fairer Finance said Mr Tidmarsh’s case indicated issues with the industry.
He said: “Insurers who try and wriggle out of paying a reasonable claim fuel mistrust between firms and consumers.”
Telegraph Money contacted Paragon which declined to comment, saying it was a matter for Charles Taylor, their loss adjusters.
A Charles Taylor spokesperson said: “Millennium aims to provide all of its clients with full and prompt settlement of all legitimate claims.
“In this case the claim was referred to the Financial Services Ombudsman for their opinion. We fully respected the Ombudsman’s decision in this case and settled the remainder of the claim. The case is now closed.”
Loss assessors and loss adjusters
The role of “loss assessors” is to manage the claim on behalf of the policyholder.
They value the cost of the damage to your home in the event of a disaster, such as a fire or a flood, and submit a claim. They will also prepare the claim and negotiate with the insurance firm.
They are the antithesis to a “loss adjuster”, which are claims specialists appointed by the insurance firm.
Consumers who are unsatisfied with the insurer’s settlement have the option of hiring a loss assessor to act in their interest.
There are two payment models. Loss assessors may ask for a percentage of the settlement. This can be from 2pc (in large claims worth hundreds of thousands of pounds) to 10pc (for smaller claims). This is common in contents claims.
For buildings claims the firm may offer clients the option of using contractors in their network. If chosen, the firm is paid by the contractor on a commission-type basis.
No one can force an insurance company to increase the claim value but matters can be taken to the ombudsman for a resolution.