Is Insurance as Reassuring as It Should Be?
Today I want to talk about insurance companies. This is a topic particularly close to my heart as, if you didn’t already know, I had a severe house fire earlier this year (hence my sporadic communication of late).
We all go through years of paying insurance without ever making a claim and you have insurance in place to safeguard against disasters and emergencies. However, while I haven’t claimed for years, over the past 12 months I’ve had to use various insurers for different reasons.
It began with my car being written off when a bus struck me from behind. Actually, the process was relatively smooth, and I was lulled into a false sense of security because Ageas, my car insurance company, paid up within just three weeks. I thought that was excellent, and I picked up my new car on the 10th of May 2022 – the accident occurred in mid-April, so the pay-out was fast, and I was happy with that. I should say that the three-week delay was down to the availability of cars, and I had to go to all the way to Derby (from Birmingham) to get my new car!
So when we had the house fire on the 9th of February of this year, I contacted everybody immediately, some before the fire engines even arrived. The house insurers advanced some money but after that nominal amount, they began asking for absolutely everything, estimated values of everything that was lost, when things had been purchased and lists of what was ruined. Believe me, all of the above is an impossible task! Consider this carefully. How can you think of everything you’ve lost? Let’s say you go away from home for a while and then you’re asked to list everything in your kitchen, your bedroom and your home office for example, could you do it and remember every single item? And then put a value on it? If you bought things 5 years ago (and let’s not forget, insurance policies can be old, put into place 10 years ago or even longer), how can you remember what you paid for a microwave you purchased 5 years ago, let alone recall the make? You have to guess the value! It really is very difficult.
Penn Insurance, who are our buildings and contents insurers, have been relatively amenable, albeit very slow. As an example, I sent an email to their loss adjustor yesterday, and received an email back to say they’re on holiday until the 31st of May. Making that point about building insurance, I have a combined policy which makes sense. Here’s why. Consider carpets, would you say they’re building or contents? You can’t take them up and move them to a new house, can you? Yet despite this, they come under contents! Laminated floors come under buildings, yet curtains are contents whereas curtain tracks are also buildings – it’s crazy! In one way it doesn’t matter because I have a combined policy, but you do have to specify when making a claim as, for example, you might have a £million for buildings and 70 k for contents. I would definitely recommend a combined policy.
I work from home, and I have a separate business insurance with AXA to cover the business. AXA has been quite simply appalling. It took ten weeks for their representative to finally visit. He spent a reluctant hour with us and promised to send a follow up email within 24 hours, for which after over a month we are still waiting. We’d kept our fire damaged equipment in our neighbour’s garage, and we showed the rep, but he wasn’t at all interested in looking at it. He said that AXA would pay if we provided copies of the original receipts. The fact that we could show him the burned computer, printer, scanner, and so on was of no interest which quite honestly shocked us. Think about it, we’d just endured a house fire; how many people have copies of original receipts let alone after a fire when paperwork has been destroyed? Thankfully we are a cloud-based business and I started to locate copies of invoices but the first one that I found was purchased in my own name and the then charged to the business. AXA said that this was not acceptable because the receipt has to be in the company name. I have since spoken to my accountant and he confirmed that this is normal for small businesses, and it is perfectly acceptable for the HMRC so why not AXA? How ridiculous! They are as obstructive as possible, it seems.
The fact is that every single item from my reading glasses to my mobile phone was destroyed. My belief was that my business insurance was meant to protect me from disaster but 3 months later on, they’re still arguing and haven’t paid me a penny. Put it this way, if I hadn’t used my own money to replace the business equipment the business wouldn’t exist anymore.
The upshot from this is that while insurance is there to help in the event of an emergency, it can also hinder. The household insurance company was informed immediately, on the day of the fire and yet they did nothing to help. I secured the house boarding up the damaged window preventing access from the weather and intruders. The gas and electricity had been turned off so I organised the electrician and the electricity testing so that the power could be restored. We were unable to live at home for almost three weeks so it was important that the electricity was restored so that the burglar alarm could be reconnected. I then arranged the builders; in fact I’ve organised everything – whereas the insurers just created more angst and work for me.
What have we learned from this experience?
Read the small print, be informed about what’s covered, take out business insurance if you work from home because you won’t be covered without it and keep receipts and copies. Scan them, save them in the cloud if you can. Do be prepared for the fact that your insurers will work at their own pace and can be extremely unhelpful, contrary to what you might think.
Finally ensure that you keep a cash reserve in case of disaster. We have spent around 30k out of our own bank account. If I hadn’t had access to that money, my wife and I would still be sitting in a hotel somewhere with our home deteriorating by the day. My business would have disappeared, and our mental health would have suffered.