[Closed] House Insurance Cash Settlement

not sure if its a thing or not, but everyone seems to be doing it so " bump" to make it visible ??

Having never gone through this process before, is there anything i should be aware of? Do cash settlements normally match the actual cost of repairs? etc.

Typically yes, will cover the costs BUT, if anything un-expected transpires you may fall short. On the plus side, if you get it done under budget, win.

Can you live in property while works are underway? You may have cover for alternative accommodation/temporary storage of your contents, check your policy documents.

The loss adjuster is not your friend and is appointed to represent the insurer, keep this in mind.

One thing to be crystal clear on is exactly what you are insured for. Many policies will say if they cash settle, it will be for the amount that the insurer can get the work done for. This is likely to be much less than you getting a trade in to do the same work.

Similarly with contents, check the basis of reinstatement - if it's 'new for old' then generally you are good, but if not, then prepare to be very low-balled.

The loss adjuster is the insurer's agent and as such is looking to (legitimately) reduce the pay out as much as possible. If you think the loss is substantial, you may wish to contact a loss assessor to act on your behalf, but be aware they take a percentage of any settlement (and, in my professional experience, are all to a man spivs and wide boys, but your MMV).

I would be very cautious.

Materials prices keep rising at the moment. Also if any other work becomes apparent, or if the work is not done correctly etc.

We had a flood in Feb

They lowballed the shit out of us. -in that we couldn't even get materials for the price they originally offered.

I said well if you can get it done in a timely manner for that price crack on because I don't believe it.....

They fell at the first hurdle... Apparently my flooring was too expensive and they came back with alternatives all of which cost about 1/3rd the original flooring and looked nothing like it.

In the end because I wanted my house back I supplied reciepts for everything (as the floor was only down 6month) as justification for additional funding and got enough of them to get a painter in (their original quote allowed for them painting half a wall.....who paints half a ****ing wall....especially in bright orange Matt scubbable.....you'll have a nice flash line where old and new meet) and to buy the materials for the floor and about 100 quid for me to lay the floor......

Tread carefully. Negotiation is hard going/nee impossible.

I still had to make good the plaster damage and wood work off my own coin but I'd still be without a dining room waiting on them (axa and bvs)...... Not a good experiance at all.

Materials prices keep rising at the moment.

V good point - there are also long lead times for trades as well so perhaps factor that in.

I said well if you can get it done in a timely manner for that price crack on because I don’t believe it…..

That would be my approach too. It depends whether your policy says it's at the insurer's option to reinstate or cash settle.

Tread carefully. Negotiation is hard going/nee impossible.

I have a tale of woe that could have been much worse. We had slight vegetation related structural movement, so made a claim which was accepted. Took over 12 months to get to the point of reinstatement works (I insisted they do it). Works were helicoil and repair cracks to stonework, and repaint interior and exterior.

I said that we needed specialist paint for the exterior as it is Bath stone (painted by a previous owner) and therefore needs to be breathable, and that they were not to start work until we'd agreed the exact spec. I'd made clear I was happy to pay any extra for materials over and above standard masonry paint.

Anyway, the works took much longer than they anticipated and ran into our holiday, so we had to leave them to it. When we did, we left explicit written instructions that no exterior painting should occur until the material had been agreed with insurers.

You know where this is going...

Got back to a Sandtex-painted frontage and a friendly note saying "hope you like the colour, the boss chose it".

Cue some very strongly-worded letters from me to the insurers, all of which were ignored. Unfortunately it got to the point that I had to issue court proceedings and it was the day that they were due to file their Defence that the insurers called up and paid the entire claim, which included the cost of having the incorrect paint stripped off completely.

I am/was lucky as I am a lawyer and spent the bulk of my career acting for insurers so know my way round their policies etc like the back of my hand, but for anyone else, I dread to think what the outcome might have been.

Also resulted in the claim cost to the insurer increasing by 1000% - I suspect there were some very unhappy subcontractors out there...

I just got royally shafted by a loss adjuster on a flood claim for an estate that I was dealing with. Settlement was £13600, reinstatement cost £20k.

As people have said above, they are working for the insurance company and trying to save them money. They are not your friends.

I deal with this every day (surveyor appointed by insurers & loss adjusters).

Taking the cash can work well for some people but you will need to establish the project value first. From your description of the damage it's likely that the loss adjuster will arrange for a network or panel contractor to attend & price the work. Alternatively they may appoint a surveyor who will prepare a schedule & obtain tenders.

Either approach will get you a project value which would form the basis of a settlement, but the insurers will remove any contingencies as the risk would now sit with you.

For a minor loss, the pitfalls & risks are minimal - but IMO you should look out for escalating electrical / re-wire costs if it is subsequently discovered that you need a new board / partial re-wire etc to comply with current regs (plus all the associated chasing / filling /decorating costs).

Don't be too wary of the loss adjusters - yes they are employed by the insurance company but their role is to implement the terms of your policy, nothing more nothing less. If you have a belt & braces high net worth policy for example, you will have no arguments with inappropriate contractors or squabbling over how many coats of paint your walls should be painted with. If you opted for the cheapest option on compare the meerkat, things may not be quite so easy, eg you may find that your policy doesn't have a matching items clause, so you wouldn't necessarily get a full new kitchen if a couple of units were damaged - the contractor would obtain the closest possible match.

I would advise against appointing a loss assessor. Apart from one job I'm running at the moment where the loss assessor has had a positive input, in all other scenarios they have done nothing but delay matters, add additional costs to the claim (but not in the policyholders benefit) and turn an amicable process into a battle.

Feel free to PM me if you need any advice or need a surveyor 😉

Where are you OP?
I can give you the name.of a company that specialises in this type of insurance work - but they've mad busy.

Don’t be too wary of the loss adjusters – yes they are employed by the insurance company but their role is to implement the terms of your policy, nothing more nothing less.

Good advice @Marin_Maketh_The_Man, but I do have to take issue with this - their role is to try and minimise their principal's losses. They are absolutely the insurer's agent and it is the direct scope of their instruction to reduce losses wherever possible. They have target savings and KPIs and all sorts, all designed to reduce insurers' outlay. I know this because I've reviewed the agreements under which they're appointed by insurers.

That said, of course they will pay legitimate claims but will always opt for the cheapest option -for example, if your room is painted in F&B, they'll only allow for Dulux Trade (which I'm sure is fine - not trying to debate the respective merits of paints, but one is definitely cheaper than the other).

For a minor loss, the pitfalls & risks are minimal – but IMO you should look out for escalating electrical / re-wire costs if it is subsequently discovered that you need a new board / partial re-wire etc to comply with current regs (plus all the associated chasing / filling /decorating costs).

This is probably the most important point for the OP - insurers like cash settling because it means they're off the hook for any necessary consequential works, so be very wary.

personally unless you are in a trades related job / have contacts in the trade / happy to do the majority of the work yourself i would never consider a cash settlement for a significant re-instatement claim.

as others have said the cash settlement is likely to be on the lower end of the budget to get the works done, so unless you are pretty savvy with your sourcing, negotiating with trades, project management etc you will likely overrun on project costs vs cash settlement, and that's before you find any nasty surprises in the re-instatement.

don't forget the value of your time as well, if you take a cash settlement it's all on you to sort out which will be a massive ball ache. if you proceed with the re-instatement with the insurer it's on them and the loss adjuster - will still be a ball ache with many many phone calls chasing all parties, but likely less than doing it all yourself.

i got hit in the Sheffield floods in 2007 which required a complete strip out of the ground floor back to brick and floor joists. the cash settlement they offered me was something like £60K including contents, the eventual cost of the works and contents was nearer £90 due to inder budgeting ny the insurer and unexpected / consequential costs

as others have said, check your policy, but if you've got a decent wording re-instatement via the insurer should be comparatively painless to doing it yourself. also, some good advice re loss adjusters above, but don't forget you can negotiate with them

My gripe wasn't with the cheapest policy on compare the merkat.

It was with an underwriter of an insurer that's often recommended on here.