After you report a loss, the insurer assesses it and then pays, repairs or declines. Knowing how settlement works helps you challenge a result that looks wrong.
Assessment
The insurer, or a loss adjuster or appointed representative, checks that the loss is covered, that it is genuine, and what it is worth. They may ask for evidence, inspect the damage, or use a repairer’s report. This stage is where exclusions and conditions are tested.
How payouts are calculated
Most household and consumer policies settle on a new for old basis for contents, but buildings and some items are settled at reinstatement or market value. The payout is the covered loss, minus your excess, and capped at the policy limit. Our piece on premiums, excesses and policy limits explains these numbers.
Cash, repair or replacement
- Cash. You receive a sum and arrange the fix yourself.
- Repair. The insurer uses an approved repairer, common in motor and home emergency.
- Replacement. The item is replaced rather than paid for.
If you disagree
If the assessment looks wrong, ask for the insurer’s reasoning in writing and challenge it. If that fails, the complaints process and the Financial Ombudsman can review whether the decision was fair. Underinsurance and the average clause can reduce a payout, so check those before you rely on a limit.