Cash Settlements and Champange Tears

[lowmorale]

Hi all,

 

First time poster, long time...non-poster.

 

Very long story made very slightly less long: we've just passed another anniversary for a major but fully covered and accepted home insurance buildings claim (cue champagne with a chaser of salty tears).

 

After a protracted and life leaching dance with the Loss Adjusting firm over issues such as: process (lack of); information (lack of); support (lack of); surveyor (lack...you get the idea) to help get the claim processed, we now finally have an approved Schedule of Works from a personally engaged building contractor and have instruction to commence works.

 

However, due to a myriad of factors and numerous delays from the Loss Adjusting firm the works have yet to get fully underway and the Loss Adjusting firm have suddenly and unexpectedly proposed, formally and via letter, the notion of a cash settlement in order to finalise the claim.

 

This settlement is to be "based" on the overall building reinstatement estimate as agreed by the Loss Adjustor, though is as yet without mention of a specific value or settlement figure and within a context of awaiting further advises from that mysterious and omniscient emerald city dwelling entity - the underwriters

 

A few months prior to this letter a telephone call with the Loss Adjustor resulted in their passing mention of the possibility of a cash settlement 'with indemnity and taking into account deprecation of the property'.

 

There was no mention of any such depreciation in the letter but the verbal mention by the LA has thrown up a host of questions on which I would greatly welcome any input:

 

1) Does a cash settlement on a claim automatically revert an insurance policy to one of indemnity/old-for-old?

 

2) Can a cash settlement include VAT? The current Works Schedule has VAT added to the bottom line because naturally the contractor is VAT registered but we are not.

 

3) If we can't claim VAT through cash settlement, can/should we include VAT on any PC/material sums e.g. a damaged bedroom wardrobe that needs replacing. in the final settlement figure?

 

4) Does a cash settlement close the door on any further claims being made for additional work discovered during reinstatement i.e. or do we need to factor in a contingency in the final settlement figure?

 

5) Does a cash settlement close the door on any formal complaints being issued against the Loss Adjustor/Insurer for mismanagement of the claim?

 

6) If, as I suspect, some of the above can only be answered by the policy documentation, can anyone help decipher the last sentence below, found in the policy booklet under a section about 'Settling Building Claims' regarding the conditions under which the insurers can make a deduction for depreciation of wear and tear:

 

"We Will only make a deduction for depreciation or wear or tear if:

- the building have not been maintained in a good state of repair. (NOT APPLICABLE TO OUR SITUATION)

- the sum insured is less than the full cost of rebuilding at that time. (NOT APPLICABLE TO OUR SITUATION)

In addition at our sole option we may limit payment to the proportional cost of repair and reinstatement following loss or damage by an insured event, that the current sum insured represents compared to the full rebuilding cost of the buildings." (NOT APPLICABLE TO THE UNDERSTANDING OF COMMON MAN?)

 

If you've got this far through the post thanks for your time and any info you can offer will be hugely appreciated.

Edited January 25, 2013 by lowmorale
Title typo

[caro]

I can't answer all your questions but I can tell you that a cash settlement will not include VAT because you will be paid, you aren't VAT registered and they couldn't claim it back.

 

If your policy is new for old I suggest you see if you can have your contents replaced by the insurance company because they will only pay what it would cost them to replace the goods, and they can buy for a lot less than you.

 

We had a cash settlement for a major claim because the LA appointed builders were so bad we wouldn't have them back after we saw their first days work and they stole our built in oven which was perfectly ok, and it was taking forever to get another builder.

 

We got a quote from our builder which amazingly the surveyor said was too low so the builder increased it on his instruction. The big advantage of a cash settlement is that you employ the builder and have what you want done. We did some work ourselves, had a few things done differently (better) than before, and the cash settlement was just about enough. Because you've settled the cash is yours to do with as you like, but if you aren't happy with the work you can't complain to the adjusters or insurance.

 

If you aren't happy with a cash settlement don't be afraid to refuse it, but we accepted to get the nightmare over with.

 

What we found was that once a builder knows the insurance is paying they will bump up their prices - BIG TIME!!!

 

Get some quotes and get an idea how much you need before making a decision.

Edited January 25, 2013 by caro

[caro]

One other thing - get quotes not estimates and get them itemised so there can be no misunderstanding about what they're being contracted to do.

[Northernpug]

As you say. it depends on the policy wording but if the wording says it is on a reinstatement basis then that is what the basis of claim settlement should be, makes no difference if it is a cash settlement or if the insurers settle the invoices direct with the supplier.

 

The only deductions they may make is for "betterment" E.g., if your property had wooden single glazed windows that were subject to the claim and you decided to replace them with plastic double glazed units, then the insurers would only pay out what it would have cost to replace with wooden single glazed units and you would have to pay anything in excess for betterment yourself.

 

The amount of the claim is the total amount you pay out including VAT.

 

If you accept a cash payment in full and final settlement of the claim, it will bar you from claiming for anything else discovered during the works. You should get a settlement for your total outlay when all the work is completed (subject to the terms and conditions of the policy).

[raydetinu]

If the work is exrtensive and you are not sure about the specifications to cover items, suggest you get a loss assessor or surveyor to assist you.

You can include their fees in your claim.

very often adjusters will accept quotations you have obtained for the works and then you submit invoiice when when works done and they then pay builder direct or to you, and this will include the VAT element.