Will your insurer pay out after a burglary?

14 May 2013

According to the experts, insurance companies are getting tougher when it comes to paying out on insurance claims – given my recent experience, I can well believe it.

Between the third and the final quarter of 2012, the Financial Ombudsman Service saw an increase in complaints about every type of insurance except buildings cover; while research earlier this year from the British Insurance Brokers' Association revealed that 90% of insurance brokers believe insurers are becoming stricter on paying claims, mainly because of the economic climate and fraud.

You might think that if you've taken out a home contents policy and your possessions are stolen, you will receive a nice fat cheque that will fully cover your loss. But if you've ever been burgled, you'll know that it's not necessarily that straightforward.

When I was burgled recently (thieves took a computer, laptop, jewellery and a guitar) Axa were pretty quick about dealing with my claim but I was also passed from pillar to post a lot of the time.

Once you've gone through the hurdle of searching high and low for receipts, bank statements and credit card bills, or at least photos of you wearing the jewellery that has been stolen, the insurer passes you on to 'insurance replacement specialists' before settling your claim. As the name suggests, their job is to replace the missing items – but not necessarily with the latest model.

According to the insurance replacement specialist's brochure, this is based on the current market equivalent for products of "a similar and/or same quality and specification and NOT the original cost of the item".

Now dealing with three specialists, I was told that the guitar would be replaced with the exact same model, but was not so lucky with the computer and laptop. We were scolded for going out and buying new models rather than waiting for the insurance company to settle, so the specialist offered us £70 below the list price of the brand-new iMac we bought and £450 towards a new laptop, which had cost £699.

The jewellery was more complicated to settle. With gifts, I had to ask those who gave them to me for a letter stating how much they paid – a bit embarrassing – while some items were so old, I couldn't remember where I'd got them. Where they could replace the item, the specialist offered a gift card to use at a high street chain such as H.Samuel and Ernest Jones; while a cash settlement was offered for the remaining items – including pieces of jewellery where I could supply no evidence at all.

My experience has made me realise how important customer service and satisfaction are. When you search comparison websites such as moneysupermarket.com for quotes on contents insurance, there is nothing to indicate whether an insurer will come up trumps when it comes to a payout. You're making a judgment based purely on price – the monthly cost, the sum insured, the excess you're prepared to pay, plus additional extras such as legal and emergency cover.

But I would suggest before plumping for the cheapest insurer, you take a look at how satisfied its customers are and combine this with the price comparison check.

Consumer rights organisation Which? publishes a handy list of recommended providers with scores for customer satisfaction (currently NFU Mutual comes top for home insurance with a customer score of 83%, closely followed by Frizzell and Hiscox). You'll also be able to see who are the most trusted providers of home, car, travel, health and life insurance in our own Customer Service Awards. See the 2013 shortlist here.

In the end, my own experience of making a claim was surprisingly time-consuming, if fair. But I'd be interested to hear your experiences. Did you get a reasonable amount of cash for what was stolen? Do you think insurance companies are getting tougher on paying claims?