Why has my insurance claim been settled in vouchers and not cash?

Thursday, 01 September 2011 05:24

Vanessa Chance, an insurance expert from LV answers the question:-

Mrs Page asks:

My insurers had my stolen jewellery valued by a company called LMG. I have a letter stating that the valuation was £1800. They invited me to get in touch to spend my credit, however, when I did they advised that i had £1800 in VOUCHERS. I have told my insurers that I do not want vouchers and they then cut the valuation to £1170 due to a discount they get from the valuers.

I am sure customers do not know about this practice, I certainly didn;t and want to know if I have to accept these vouchers or a lesser valuation, even though I have in writing that the sum should be £1800.

Vanessa answers:

This practice is standard across the insurance industry and is not limited to jewellery items. Insurance is intended to put the policyholder back in the position they were in before the loss. Insurers can do this by offering to repair an item or by offering a replacement, which may be through a specific retailer.

Insurers can buy vouchers at a discount as they put a lot of business through the big retailers. Most insurers will offer customers vouchers as this will usually give the customer a better deal and more choice when they replace the item. Where the customer chooses to have the cash equivalent instead, the insurer will deduct the discount as this reflects what it actually costs them to replace the item - although it is unusual for the discount to be as high as 35% as in this case.

However, if the jewellery was old and/or a close replacement could not be found then the insurer should not take off the discount. If the customer can get an exact replacement through the original supplier and the insurer’s supplier cannot match it exactly, then they should pay the costs quoted by the original supplier. 

If you have a question for Emma or Vanessa, go to the myfinances.co.uk Ask the Insurance Expert section.

Or for more information on your insurance options go to LV's insurance site.

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