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Hi Lee and Trish,

Since my earlier post I thought I would have a look at the CC Policy, on line. (I am insured, new for old with another insurer.) The legal aspects of Insurance disputes take some time to unravel, hence this long post.

The CC standard policy, with new for old for a van up to three years old reads

“If the Caravan and/or Equipment are lost, stolen or destroyed within 36 months

of the date that they were first sold as new We will replace the Caravan and/or

Equipment with new items of the same or similar manufacture and model or

pay the cash equivalent at Our discretion. Settlement will take into account any

available discount.” (Check your own policy)

The liability of the insurers is then qualified as the policy obliges you to insure for full replacement value at the commencement date of this insurance and at subsequent renewal dates.  If you did not lift the insurance cover to the value of a new van this year then you have a difficulty in seeking a monetary settlement equal to the cost of a new van. The most you can recover will be the limit of the cover you have taken out. For the purposes of this advice I will assume that you are insured for the value of the new van you seek

There is an exclusion in that electrical damage is not covered. However your assessor has not sought to use that clause on your claim to avoid a liability. Bear it in mind, however.

There are two issues here (1) is the van “destroyed” and (2) paying new for old is at the insurers discretion. “Destroyed is not defined which is not helpful. However, under the settlement part of section 1 of the policy, at their discretion they will pay new for old if the van is “beyond economical repair”. “Beyond economical repair” is also not defined, but from what you say the assessor seems to argue that the van is not beyond economical repair.  

In my view the insurers should use the industry standard definition of “beyond economical repair” and, from what you have said, it seems the assessor is using a different definition. Industry standard definition is where the cost of repairing the insured property exceeds the market value of that property. Using the industry standard definition, then, your van is beyond economical repair on the information you have supplied. Section 1 clause 3 and “Claims Settlement” paragraph (b) applies to your argument for a new van. (However just check that your policy numbering is the same)

The assessor may be defining “beyond economical repair” as when “the cost of repairing the insured property exceeds the replacement value of that property”. Can you see the subtle difference? I think you should try a letter to the assessor setting out your claim under Section 1 clause 3 and “Claims Settlement” paragraph (b), arguing along the line I suggested, that the van is beyond economic repair and thus you are entitled to a payment equal to the new van. If the assessor responds along the line that as the cost of repair is less than the cost of a new van, so it is not beyond economic repair, then you need to challenge him to show just where the policy defines “beyond economical repair” in that manner, contrary to insurance industry norms.

If the assessor is using that argument then it seems to act as a contradiction to the whole basis of your policy. In effect you are paying a premium for new for old cover which is not being made available if the insurers can define “beyond economical repair” in a manner contrary to industry standard practice. To do that, they should so define it in the policy.  Having, in effect, hidden that definition, that is, arguably, maladministration, as they have not made it clear when issuing the policy. That is a matter upon which the Insurance ombudsman may be likely to side with you upon any complaint being laid before him.

The second issue then is the “discretion” of the insurers. Whilst the exercise of the discretion is entirely with them there are certain principles which must be evident when they exercise that discretion. They must not fail to take into proper consideration the facts. It must be logical. The decision must not be one that no reasonable person would come to. It must be made in good faith. So, offering you, say, £2000 against the repair quotes you have obtained would be an unreasonable use of that discretion. As things stand the assessor is offering to put your caravan right and on the face of it that is reasonable, after all you want a caravan you can go away in and that is on offer. So, how can you get round that?

Arguing that they are trying to save money is the equivalent of saying that they are acting in bad faith and that impugns their reputation. Best not to insult them.  You have paid an enhanced premium for new for old cover for when the van is beyond economic repair. It is relevant that they take that factor into account when exercising their discretion. To take the premium on the one hand and then to argue that although the van is beyond economic repair (on industry stand definitions) they are to deny that insurance benefit is not taking all relevant facts into account and illogical. Further, it can be argued that such an approach may offend the Insurance Industry “Treating Customers Fairly Rule” which is enforced by the Financial Services Authority. Always worth mentioning that rule. To be fair it would be a challenge to argue that the assessor is exercising the discretion unfairly. Try to avoid the argument and focus on the beyond economic repair argument as that should be easier to win. If you do get to argue the discretion thing, try my argument in this paragraph.

If, at the end of the day, you are not happy with their final position ask for a copy of the insurers' complaints procedure and then follow it to the letter. If you're still dissatisfied, then ask for a 'deadlock' letter indicating that you intend to lodge a complaint with the Financial Ombudsman Service. That will cost the insurers several hundred pounds, and man hours, but costs you nothing.

Just a thought, but did the Health and Safety Executive investigate the matter? Maybe the site failed to comply with its obligations under the Health and Safety at Work etc Act 1974 and various regulations thereunder e.g Electricity at Work Regulations. (Breach of Statutory duty or a negligence case). If there was an investigation can you secure a copy of its findings? What I am leading to here is the potential for discussion with the site/their insurers for additional compensation. Don’t forget, as a minimum, you may lose any no claims bonus you are entitled to. Perhaps there was some physical consequences arising out of the problem?

Hope this assists.

Phil

Cheers David...its just so much easier if you have your van stolen never to be found. Shame we never have a choice!!!!!

Phil

"concise".....I must be slipping....but thanks. Hope you never need it.

Phil

Dear Phil

THANK YOU!!!!!  That is the most useful and yes, concise!, response we have had - and has definately sparked some new lines of enquiry.

You've really grasped the nub of our problem.

We can't seem to find any way to PM or message you on here - but we'd love to talk to you if that's possible?

Trish & Lee

Hi Trish

partyzone at wymingbrook.co.uk

Phil

Another brilliant advice posting from Phil and for free!  Do hope you can now take on the insurance company.   Happy to take our money but never keen to part with theirs.  Policies are minefields for the ordinary chap in the street to unravel, I don't know why they are not legally obliged to use basic language, but that is another story.  Good luck hope you get a good result.

Carol

Email on its way to you Phil!

And Carol.... Yes, that's how we feel too!

Trish & Lee

Consider two cases. the first would be without new for old insurance, with repairs costing £13k and a market value of £13k the insurance co would write the van off, pay you the £13k and take your van. If you chose to buy the salvage they would sell it to you for about £6k leaving you with £7k to do the repairs, if you chose not to buy the salvage you could go out and look for a similar van for that money, either way it would probably end up costing you more to sort it out than they paid.

Second case is with New for Old insurance. The van still has a market value of £13k and the repairs are still going to cost £13k but because the insured value is much higher they will not write the van off, they will however pay for repairs worth £13k to be done. At the end of the process you have your own van back with all sorts of new devices in and all working as it should at zero cost to yourself. You also have the option to take a cash settlement and do the work yourself, and since the van has not been written off you still keep possession of the shell and given your capabilities might be able to complete all the repairs yourself for somewhat less than £13k in which case you have lost your time but got some payment for it.

To me this simply illustrates that that with the new for old cover you are better off in that it leaves you in a better position than you would have been with market value insurance.

One area that hasn't been touched upon is that although you know it was down to recklessness by the electricians on site, from the insurer's perspective they don't want to be encouraging the replacement of a van with a brand new one.  There are unscrupulous people out there ( with vans much older than 2 years ) who might abuse the insurance and engineer an accident so that their 6 year old van is replaced with a brand new one.

I would think repair where economically possible would be their path so as not to provide any incentive.