Home insurance payouts may leave some claimants out of pocket, warns Which?

NSURANCE customers are being warned by Which? to carefully weigh up potential cash settlements, amid concerns some offers may not be in their best interests.

- 

When resolving a claim, insurers may offer to repair or replace losses itself, a cash settlement, or a combination of the two.

Research for Which? involving more than 2,800 people who made a home insurance claim in the past two years found that among the claims partly or fully accepted, around two-fifths (41%) were granted a direct repair or replacement, two-fifths (38%) were offered a cash settlement, and one fifth (19%) were offered a combination of both. The remainder selected “other” or “don’t know”

While accepting a cash payout can seem like a fast solution, in some cases claimants can risk being left out of pocket in the long run, Which? cautioned.

For example, if a house has been damaged and needs extensive repairs, the full restoration costs may only become apparent when work is under way.

Some people may end up partially relying on their own funds to put damage right.

The consumer group raised concerns that rapidly rising costs for many trades could mean consumers underestimate the full price of repair work.