Not upheld: settlement of insurance claim - dispute over valuation methodology and replaceability of stolen items complaint against Tesco Underwriting Limited

Decision detail

Summary

Mr A and Ms M complained to the FOS about Tesco Underwriting Limited's settlement of a theft claim for stolen jewellery. Tesco offered to replace the items via its personal jewellery service (making replicas) or provide cash settlement based on Tesco's replacement costs rather than full retail price. Mr A rejected the replacement option and received a cash settlement of £8,953.37 plus £350 compensation, but complained that Tesco had not provided evidence of potential replacements before settling and that the valuation was provided too late. The ombudsman found that Tesco's policy terms permitted the discounted cash settlement approach and that Tesco's reliance on expert analysis was fair. Since Mr A did not dispute the expert valuation but declined to allow the replacement to be attempted, the ombudsman could not criticise Tesco for not proving replaceability. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that the policy terms allowed Tesco to settle based on its costs rather than full retail price when a policyholder requests cash instead of replacement. Tesco relied on expert analysis from a jewellery expert who concluded the items could be replaced by replicas. Mr A did not dispute the expert valuation but disputed the expert's conclusion that items could be replaced, without providing contrary expert opinion. The ombudsman reasoned that if an insurer's expert says an item can be made, they should be given the chance to do so unless there is good reason to doubt it (such as unavailable materials or provenance issues). Since Mr A declined the opportunity to allow Tesco to attempt the replacement, the ombudsman could not criticise Tesco for not satisfying him that replacement was possible. The late provision of evidence did not impact Mr A's ability to refer the complaint to the FOS.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website