Insurance settlement deals

[flango]

I'm hoping we have someone with insurance or claim knowledge on here who's legal knowledge may be greater than ours to help and advise.

You will probably remember from my other thread we were unfortunate enough to have been broken into and tools and garage equipment stolen.

I cant go into too much detail on a public forum but the insurance company have split the claim into separate parts, eg, hand tools, diagnostic equipment, workshop equipment etc. Some of these parts are under dispute others are not and they have agreed to pay, however it is the method of payment that concerns me

In order to be paid out in full they want proforma invoices of all the equipment we will need to buy then they will release 75% of the money which means we have to fund the other 25% which is not an option as we have spent everything we have trying to keep the business afloat so there are no funds in the kitty to make up the 25%.

Their second proposal is they will stump up a cash settlement but only pay 78% of the claim value and we have to submit receipts.

All I want is to place an order with our suppliers to replace the equipment and pay their invoice but it would seem that is too much to ask.
They won't even pay the suppliers direct on our behalf.

I would welcome comments on the above is what they are proposing actually legal? where do we go next? I will at some point have to engage specialist legal advice but welcome the panel's comments.

If this does not get resolved quickly then it's going to take us down and what was a very sucessful business will be no longer

All help, advice and comments welcome

Cheers :bannana:

 

[bolide]

Is there a provision in your policy for loss of income? If so you could argue that your injection of funds, loan / rental of equipment to keep the business going represents a gain to them as there is no further claim

Have you got membership of a trade body which can help with legal advice? Or would a loss adjuster appointed by you be an advantage?

I can't comment on the percentages quoted but assume the requirement for a proforma or receipts is designed to prevent fraudulent claims being paid out in cash. How does the policy state claims will be settled?

Perhaps this an offer that could be negotiated

Nick Froome

 

[developer]

There will be an ombudsman type person to appeal to, however, it's not a quick process.

While not helpful to your circumstances, can I say (again) that I'd cut the hands off burglars and thieves - I can't think of anything more intrusive than some no mark rifling through what you've built up/worked for.

Aaaaaargh - makes me angry .

 

[flango]

Is there a provision in your policy for loss of income? If so you could argue that your injection of funds, loan / rental of equipment to keep the business going represents a gain to them as there is no further claim

Have you got membership of a trade body which can help with legal advice? Or would a loss adjuster appointed by you be an advantage?

I can't comment on the percentages quoted but assume the requirement for a proforma or receipts is designed to prevent fraudulent claims being paid out in cash. How does the policy state claims will be settled?

Perhaps this an offer that could be negotiated

Nick Froome

yes there is, there is business interruption insurance for loss of income and business has been well and truly disrupted as we can't do specialist work as we have no equipment to do it and their delay is causing this, so I am just going down this route with another claim.

I have access to specialist legal advice but it's not cheap even at mates rates.

Policy states claims settled on a new for old basis by cheque payable to the business (fair enough)

cheers

 

[developer]

I should have added that the Ombudsman's service will look into the problem for free (assuming they think there is an issue to answer) if you've previously complained in writing and not got the satisfaction you wanted.

It won't overcome your immediate problem, but once the case is registered they will be working on it while you concentrate on the business.
Financial Ombudsman Service

 

[Deleted member 55947]

They are probably trying to offer you a reduced settlement as they know you desperate to replace the tools. The very fact they have offered 75% proves you have a legitimate claim and they are trying to entice you into a quick resolution. I go for a legal consultation to see what your options are. These b******* are quick to take your money but don't like paying out. Good luck and stick to your guns

 

[WOODYTHEWISE]

in order to be paid out in full they want proforma invoices of all the equipment we will need to buy then they will release 75% of the money which means we have to fund the other 25% which is not an option as we have spent everything we have trying to keep the business afloat so there are no funds in the kitty to make up the 25%.

As I read it they will cover your claim in full but with initially only 75% of the cost, leaving a shortfall of 25% to be covered by you?.
How long before they pay the other 25%?
Will the majority of equipment come from one source? If it is would the supplier not be willing to wait for the insurance company to stump up the rest, especially as you will be spending a great deal of money.

I truly wish you well and hope its soon sorted.

 

[stevieb15]

Hire yourself a claims adjuster who will represent you in the same way they have used the services of either an in house or free lance claims adjuster to frustrate your claim.
One of their favourite tricks is to tell claimants they are under insured by xx% and therefore the payout will be adjusted accordingly, no better than the banks IMNSHO

 

[st13phil]

Four words: Engage a Loss Adjuster.

 

[kth286]

I should have added that the Ombudsman's service will look into the problem for free (assuming they think there is an issue to answer) if you've previously complained in writing and not got the satisfaction you wanted.

It won't overcome your immediate problem, but once the case is registered they will be working on it while you concentrate on the business.
Financial Ombudsman Service

I think you will find The Ombudsman Service is designed for retail customers (the public) not for business to business complaints.

 

[flango]

I should have said I have had a loss adjuster engaged from the beginning, ombudsman does do b2b complaints.

Just back from the lawyer and we have prepared proceedings to take this to court. Will give them one last chance today but if we have to go to court it's the end of the business as we can no longer fund it privately and we'll have to shut up shop and walk away. Hopefully we come out on the right side in court and if we are lucky we'll walk away with what we put in but business will be no more and unfortunately that leaves people without jobs due to the intransigence of a loss adjuster and insurance company.

 

[Bosco]

This thread makes very sad reading.

 

[StevenN]

What equipment do you need?

 

[flango]

What equipment do you need?

Virtually everything to kit out a garage except ramps

 

[markjay]

No legal knowledge as such, but...


a. We had a (private) claim a couple of years ago, the insurance offered too little and we employed a lawyer, eventually just before going to court they agreed to settle in full including all our legals fees. This was actually more than we would have settled for beforehand if they made a reasonable offer in the first place... but it did take a year of letters back-and-forth to resolve.


b. Your weak point is that you are the policy holder, in the case above we were third party. As policy holder, the insurer is only responsible for meeting the precise terms of your policy, and not in fact refund all costs etc. So the key issue here will be not simply if it is 'fair' or 'reasonable' but very strictly 'can they do this?' under the T&C of the policy. The exception would be if their T&C are in breach of some industry guidelines etc.


c. As others said, they seem to agree to meet 100% of your claim for new tools, the only issue is terms of payment? If this is indeed the case, and there is no resolution forthcoming, then I would look at any means of financing this e.g. purchasing from suppliers who can provide (some) credit terms even if at a (slightly) higher cost, purchasing using Credit Card (if applicable), or even trying to get a short-term loan from the bank (with interest) to cover the 25% - assuming you can show them a guarantee from the insurer that the full amount will be paid within a given time frame.


d. Does VAT come into it? If so this can pose another cash-flow issue.


HTH

 

[Red C220]

Any bank would fund the short term shortfall with confirmation that the insurer will settle. In that case the insurer is the guarantor.

Business insurance can be messy, there will also be a VAT issue which cannot be covered by insurance.

i.e. an Item costs £120 inc VAT. Your insurance only actually covers £100 of this as you are able to reclaim the VAT. Cash flow does not come into the equation with vat.

A pro forma will include VAT but will not be a VAT invoice, that is issued on delivery/shipping of goods or on receipt of payment.

78% of the replacement value is actually only leaving you with a 2% shortfall, as 20% is VAT. It is reasonable and usual to expect a business to fund the VAT content.

In your case (without knowing all the ins and outs) I would do what I could to get the shortfall funded and continue trading and then aggressively pursue the business interruption claim.

If you go legal you are effectively choosing to close to pursue and it is in your interest (and a legal obligation) to mitigate your loses.

EDIT: I have assumed the insurer is offering 78% of proforma total value and not 78% of net invoice value.

 

[flango]

No legal knowledge as such, but...


a. We had a (private) claim a couple of years ago, the insurance offered too little and we employed a lawyer, eventually just before going to court they agreed to settle in full including all our legals fees. This was actually more than we would have settled for beforehand if they made a reasonable offer in the first place... but it did take a year of letters back-and-forth to resolve.

I'm hoping they will settle before court too


b. Your weak point is that you are the policy holder, in the case above we were third party. As policy holder, the insurer is only responsible for meeting the precise terms of your policy, and not in fact refund all costs etc. So the key issue here will be not simply if it is 'fair' or 'reasonable' but very strictly 'can they do this?' under the T&C of the policy. The exception would be if their T&C are in breach of some industry guidelines etc.

We believe they are in breach of 2 terms of the policy/contract


c. As others said, they seem to agree to meet 100% of your claim for new tools, the only issue is terms of payment? If this is indeed the case, and there is no resolution forthcoming, then I would look at any means of financing this e.g. purchasing from suppliers who can provide (some) credit terms even if at a (slightly) higher cost, purchasing using Credit Card (if applicable), or even trying to get a short-term loan from the bank (with interest) to cover the 25% - assuming you can show them a guarantee from the insurer that the full amount will be paid within a given time frame.

They won't give a commitment as to when they will pay the other 25% we are already well into personal finances just to replace the basics to keep the doors open and people employed but currently running at a loss as the overheads cant be covered by service work alone which is all we are capable of doing at the moment. We have all agreed we can no longer pump money in as it needs a serious injection of capital to replace the things stolen, without it we can't turn a profit which is why we are so desperate for the insurance to pay. So if they stall we have no option but to shut up shop or continue at a loss until they do. I am also investigating the business interruption insurance we have to see if this will cover the delay in payment but as its with the same insurance company I think that is going to be a battle as well.


d. Does VAT come into it? If so this can pose another cash-flow issue.

Unfortunately yes it does.


HTH

Comments above

Many thanks for the help and suggestions

 

[Red C220]

Actually this is a perfect example of our nonsense VAT system.

The idea of B2B VAT is ridiculous, we should adopt the American system of only invoicing the retail customer sales tax.

It would stop all the issues above along with Billions of £ a year in Carousel fraud.

 

[flango]

Any bank would fund the short term shortfall with confirmation that the insurer will settle. In that case the insurer is the guarantor.

Business insurance can be messy, there will also be a VAT issue which cannot be covered by insurance.

i.e. an Item costs £120 inc VAT. Your insurance only actually covers £100 of this as you are able to reclaim the VAT. Cash flow does not come into the equation with vat.

A pro forma will include VAT but will not be a VAT invoice, that is issued on delivery/shipping of goods or on receipt of payment.

78% of the replacement value is actually only leaving you with a 2% shortfall, as 20% is VAT. It is reasonable and usual to expect a business to fund the VAT content.

In your case (without knowing all the ins and outs) I would do what I could to get the shortfall funded and continue trading and then aggressively pursue the business interruption claim.

If you go legal you are effectively choosing to close to pursue and it is in your interest (and a legal obligation) to mitigate your loses.

Unfortunately can't fund the shortfall through the bank as the insurance company refuse to confirm to the bank they will settle the claim as part of it is in dispute so this is only a partial settlement without confirmation from the Insurance company the bank wont entertain it.

Unfortunately the offer is 78% of the ex VAT price so we are 22% short

Funding from the bank or by other means is a risky route as if they don't pay the part of the claim in dispute or we lose in court we would struggle to repay the short term loan.

If we close the doors and walk away, if we win in court or they pay the claim we will walk away with virtually what we put in but no business and no jobs

 

[bolide]

The idea of B2B VAT is ridiculous, we should adopt the American system of only invoicing the retail customer sales tax.

I didn't realise that is what they do in America. If so it's a good idea. Why push all that money around via the banking system and have to account for it when you don't need to?

Ironically if the OP was to import all the kit from the EU he wouldn't have to pay VAT as he has a valid VAT EU number

He could buy it in Germany and drive out and collect it or have it shipped. No VAT to pay upfront and no waiting to reclaim it

Nick Froome