Do you believe your Insurance company?

I can feel another dispute coming on, this time with Churchill insurance, a dispute over a home insurance claim.

Specifically, this dispute is arising from the definition of “as new” also known as “new for old”.

In this case an old laptop was accidentally damaged and has been assessed as uneconomic for repair – so far so good.  The laptop was a Sony Vaio, a premium brand, which when bought for over £1200, was described as a “desktop replacement entertainment machine” and in independent reviews, it was described as "Extremely elegant and time proof design” and  T3 magazine said “It looks hotter than a bikini-clad Caprice, has a great screen and uses the latest tech. All in all, it's hard to beat.”

The insurance company has offered, as a replacement, a Samsung laptop reviewed by PC Advisor as: “Build quality is also fairly solid, if a bit chunky and plasticky feeling. It’s a well-rounded package and certainly worth short-listing if you’re shopping for a no-frills laptop under £500”

On the face of it, hardly a good comparison.

So how can the insurance think this is a good replacement?  Well they say it is because it is a much better technical specification than the original laptop – which it is.  Not surprisingly of course with Moore’s Law driving tech specs higher and higher every 18 months – it’s impossible to buy a brand new laptop with the old specification.

So why am I unhappy?  Well, although, I would get a new laptop with a much better specification than I had – I am a bit of a brand junkie and Sony have been my brand of choice for a lot of my high tech kit for a long time (excepting my Apple iPhone)

Personally I don’t think replacing a high end (in  its day) well designed premium brand laptop with a chunky, plasticky no-frills laptop is what “as new” means.  Choosing a new laptop isn’t just about processor speed, RAM and Gigabytes, it’s also about the emotional Brand choice.

 However, this is where the problem comes in - there is no actual definition in the policy of “As new”, certainly no mention of “equivalent or better specification”.

For curiosity, I checked the policy documents for a few other major insurance companies and they are all just as vague.  The only one that is different is a mention on a review site I found about how Sainsbury’s Bank interprets “New for Old”.  It says:

“Sainsbury's Bank offers you peace of mind at affordable rates and with superb customer service. Policy holder's claims are handled promptly allowing the policy holder to rebuild or replace that which is most important. With the “New For Old” feature, the policy holder who paid £125 for a brand new television in the 90s will be able to get the same quality of television today even if that television costs £300. Why? Because Sainsbury's Bank sees you as a person not just as another account or policy holder; because Sainsbury's Banks understands if you are comfortable and believe in their service, you will continue to be a client year after year.”

I think this type of clear and unambiguous language is exactly what consumers need and I applaud it, although I couldn't actually find this on the current Sainsbury's bank website.

I then telephoned the Association of British Insurers and asked if there was an Industry best practice about the interpretation of “new for Old” – surprisingly there isn’t.

This is main reason, why I have decided to pursue this a bit further – I wonder how many people just accept this type of replacement, glad to have their kit replaced. 

But I don’t think it should be this way, Insurance companies looking for every opportunity to minimise their payout.  Policy documents need to be explicit about what “New for Old” actually means so when consumers are shopping around for the right policy for them, it is clear what they are getting.

If you know of any case studies in this area, please do comment and let me know, or you can reach me via Twitter