Not upheld: settlement valuation and claim handling for stolen jewellery complaint against Aviva Insurance Limited

Decision detail

Summary

Mrs D claimed for stolen jewellery following a burglary, estimating the loss at around £50,000 (subject to a £30,000 policy limit). Aviva offered vouchers totalling £31,499 for replacement at its suppliers, or £18,173.80 in cash representing Aviva's cost. Mrs D refused the vouchers as she no longer felt safe keeping valuable items in her home and requested cash at the voucher value. The ombudsman upheld Aviva's position, finding that the clear policy terms entitled Aviva to settle in cash at its own replacement costs, and that the voucher offer fairly restored Mrs D to her pre-loss position. No award was made.

The Ombudsman's reasoning

The ombudsman applied the principle that fairness must be balanced between both parties to a contract. Since Mrs D and Aviva had entered into a clear contractual agreement with defined terms, and Aviva had not failed Mrs D in any way, it was fair for Aviva to rely on its policy wording. The theft, while traumatic, was not an unusual circumstance that would justify departing from the agreed contract terms. The voucher settlement fairly placed Mrs D back in her pre-loss position, and she was not being forced to accept the lower cash settlement—she could choose the vouchers instead. Aviva was not required to look beyond its own supplier costs to provide a fair settlement when it could offer reasonable replacement.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website