Sunday, 17 January 2010

Independent Inspections - they are not Independent!

The brochure which lists Independent Inspections' approved network of retailers.
Approved retailers have to pay Independent Inspections 15% commission on the value of your claim.

I have discovered some sinister goings on in the insurance industry which I want to share with the online world, the Financial Ombudsman who regulates the insurance industry and the Office of Fair Trading.

Recently a building contractor spilled paint on the communal hall and stair carpet of the large converted Victorian house where my partner lives. I have been helping her and the other co-owners get the carpet replaced under the contractor's Public Liability insurance.

The contractor and their insurance company admit they are responsible for replacing the carpet, but so far they have only offered half the cost.

Why should the co-owners of the property have to meet the other half of the cost for the contractor's accident? The contractor has insurance with Zurich Insurance for £5,000,000 public liability insurance but so far the insurers seem reluctant to pay up.

Fortunately our claim isn't with the contractor's insurers, we are not the policy holders. Our claim is with them, and we can of course simply take them to court and insist they make good our loss. But I have discovered some sinister goings on in the insurance industry which I want to share with the online world, the Financial Ombudsman who regulates insurers and the Office of Fair Trading.

If you have home contents insurance with many of the major insurers, inlcuding Direct Line, Zurich and Churchill, and you make a claim for damage to flooring or soft furnishings there is a good chance you will find yourself dealing with a company called Independent Inspections.

The Preston based company has built a big business working for insurance companies - coming out to your home and assessing the value of your insurance claim.

The Independent Inspections assessor will tell you that they act independently of the insurance company and they make a realistic assessment of the cost of putting right your damage.

What you need to know is the one thing Independent Inspections are not is independent.

They are appointed by the insurance company, and their responsibility lies with the insurance company. The insurance company is their client, not you.

If Independent Inspections agree you have a valid claim for replacement carpet they do not award you cash. No, they issue you with a mandate, a kind of gift voucher, which you must spend at one of their appointed network of suppliers. What they won't tell you - unless you ask directly - is that the approved retailer has to make a commission payment to Independent Inspections of 15% of the value of the gift voucher.

Independent Inspections told me that this 15% commission needn't concern the customer 'it goes on behind the scenes and doesn't cost the customer anything'. The customer services operator 'Peter' (they don't give out second names) said the 15% is given to the insurance company. Mmm.

But when I asked a branch of the UK's biggest carpet retailer Carpet Right to quote to replace a damaged carpet they told me they charge £2.50 a square metre for fitting, unless it is an insurance claim when they charge £3.50. That's where the commission comes from, so it does affect the customer because you'll get less value for your gift voucher than if you paid cash.

Independent Inspections were appointed by Zurich to assess the paint damage to our hall and stair carpet. They advised Zurich that it could not be cleaned and must be replaced. Independent Inspections then issued one of their mandates for £2,225.68 based on replacing an 80/20 mix wool carpet at 40 oz weight at £16.74 a square metre with £3.50 fitting, but allowing zero for lifting and disposing of the damaged carpet or delivery of the new. They also included VAT at 15% even though it has just returned to 17.5%. They won't give you any of these figures unless you ask, they say it would be too time consuming to tell policy holders how they work out the value of the loss. Or to look at it another way policy holders might be furious to discover how much they are not being awarded to cover the costs of their loss.

I also asked Zurich about the 15% commission the retailer has to pay to Independent Inspections. the claims handler I spoke to said it was the first time she had heard about it.

I quickly discovered £16.74 wouldn't buy a similar quality replacement carpet. Not only that but the Independent Inspections assessor appeared to have got the measurements wrong. I also found that the other costs - like carpet uplift and disposal are considerable.

The 3 estimators who I appointed to assess the job all shook their heads when I mentioned Independent Inspections. Apparently it's not unknown for their inspectors to get the measurements wrong, and one even told me of little old ladies turning up at his store with a gift voucher for £200 when the real cost is £600.

Zurich has since reduced its offer of settlement to £1530, to allow for 25% wear and tear, even though they agree that the carpet has 17 years wear left in it.

The lawyer I consulted said it would be impossible to buy a previously used fitted stair carpet so our claim with the building contractor should be for the full cost of replacement.

Independent Inspections told me their £16.74 figure already allowed for wear and tear. Insurance companies love collecting premiums, their zeal for settlement is somewhat less enthusiastic.

So my strategy has been to obtain 3 quotes for replacement from 3 separate respected carpet retailers. I will present these quotes to the building contractor, with the promise to sue if they do not meet their liability. How the contractor proceeds with Zurich Insurance is up to them. I hope they get their money back - as they must have hoped when they paid their Public Liability Insurance premiums.

I'll keep you posted...