I had my bike stolen in a targeted burglary.

The bike had an RRP of over £3000, but I had managed to buy it for just under £2000.

Assuming that no insurance company would pay out more than I had paid, I insured it for £2000.

The insurance company is claiming that in under insuring the bike I was accepting the risk for a portion of the value so that they are only liable to pay out £1250.

Naturally I feel that I paid for £2000 of cover and should receive that.

Is anyone familiar with the insurance market able to tell me if the insurers are within their rights?

If you insure your life for a million, and cop it, surely they don’t place a value on what your life is worth. They’ll pay out the million.

I’d threaten small claims court for starters and see how it goes.

If you have the receipt, then you have proof of value. You do not state that it was acqured new, nor whether you have a new for old policy. If you did buy it new for £2000 and have a new for old policy, then I think you are due a replacement for the same value. If you bought it used or ex demo (used), then the insurance company have a point that you did not provide sufficient cover.

Our claim did not require a receipt but we had new for old and no limit on bikes stolen from the house.

Under-insuring to get a cheaper quote is a big problem. My mates house got cleaned out, he’d under-insured and they only paid out around half of what he was expecting.

This link was the first in a search I did but there are loads of others

http://www.towergatemia.co.uk/tips-and-advice/understanding-under-insurance.aspx

if you can prove that the value new is accurate [ for you] i think they will struggle tbh

I dont know how they get away with this you should be free to insure your things for what you would accept if they were stolen – why do they care? Lower premiums but lower payouts

The insurance company want to have their cake and eat it. If the wheels were stolen, and new wheels were £300, they would only pay out 2/3 of that, as you’ve only insured it for 2/3 of the new price. But the whole bike has been stolen, they should pay out 2/3 of the price, ie, 2k. They are applying the 2/3 to the insured value, not the replacement cost.

But, check the policy wording as well. Do they say they they pay out “new for old”? If so do they expect you to quote the new value?

Sounds like a genuine misunderstanding on your part. Sadly, insurance is a legal contract and contracts don’t have misunderstanding clauses.

If it’s a new for old policy – and cycles sometimes are not covered by the new for old clause – then it should have been insured for it’s replacement value.

Underinsurance clauses have been standard for years – there is a reason they ask you for the replacement cost when you insure property. Pay half the premium, they are entitled to only pay you half the claim, I’m afraid.

I feel your pain though.

Its often known as Average.

Completely within their rights.

If you only insure for 66% of the value of the insured item, in the event of a loss the Insurer will only pay 66% of the loss. Which is fair.

However, you were actually being honest in what you did as you did not realise the mistake you were making. My suggestion would be that you make representations on this basis. In effect, you did not want to ever profit from making a claim and you were therefore not simply seeking a cheaper premium.

Offer to pay the premium that you would have paid to insure the bike for the £3k at the outset value also.

Do it as a formal but polite complaint also, as it will probably get a quicker response.

The bike had an RRP of over £3000, but I had managed to buy it for just under £2000.

Assuming that no insurance company would pay out more than I had paid, I insured it for £2000.
In general I inure my goods for the cost of replacement, the killer deal just doesn’t come along when you need it.
For a number of reasons my new bike cost me less then it would cost to replace even if I got it all from the same shop that managed to sort it all out.

You may have to suck it up but think about insuring for what you can replace it for next time.

I dont know how they get away with this you should be free to insure your things for what you would accept if they were stolen – why do they care? Lower premiums but lower payouts

Why is that bikes can’t be insured like cars, ie insured for the current market value not a new replacement cost?
My 8 year old van, bought second hand because I couldn’t afford a brand new one, is insured for considerably less value than a new one with lower premium to boot. The car insurance co., probably the same co. that insures your home and bike, definitely won’t be paying out more than the market value.

I’m perhaps realising now as I type this, it’s to do with the ‘new for old’ bit – if this is not the case, then it must surely be for the current market value.

You didn’t under insure the bike. You insured it for it’s value. It’s value ISN’T the RRP. That’s ust a recommended retail price. The bikes value is what you paid for it – which is what you insured it for.

The insurance company are at it. You insured it for it’s actual retail value. RRP’s have absolutely no relation to the actual value of goods – it’s a recommended retail price and companies cannot be coerced into selling for at a certain price point.

If the insurance company doesn’t relent, tell them you’ll take the case to the FSA. They’ll get laughed out of the building.

Why is that bikes can’t be insured like cars, ie insured for the current market value not a new replacement cost?

Lots and lots of new and used cars are sold every day. And most cars aren’t modified much if at all from their original equipment. So used car prices are pretty well established, based on brand, model, age, mileage, condition, etc.

There are just too many variables with bikes to treat them the same way.

If the insurance company doesn’t relent, tell them you’ll take the case to the FSA. They’ll get laughed out of the building.

If you’re really going down that route at least get the threat right – it’s the FCA, not the FSA.

Assuming you bought the bike new though I’d be taking that tack – they should pay out the value you paid. If second hand then you have less of a case.