Consider the following in the context UK contract law, insurance and consumer rights.
When you (a person or legal entity) buys insurance there is some expectation that you properly value the item or items insured.
If at the time of a claim, the valuation is found to be incorrect (too low = underinsured) the insurer may avoid the claim or apply an averaging clause, effectively meaning they pay less than they would if you had valued the item(s) correctly and paid a higher premium as a result. This is I believe termed a qualifying misrepresentation.
However, there is also an expectation from the consumer that if they acted in good faith they should not be penalised.
Many complaints are made to the financial ombudsman and resolved by weighing these up.
See for example:
How might this work in the context of changes to the insured value made over time? Specifically, if you consider a claim on buildings insurance with:
- A significant undervaluation is being made by the original managing agents.
- Different managing agents involved over time.
- Different insurance brokers used over time.
- Different underwriters used over time.
- The current managing agent claims that they acted in good faith to review the rebuild cost with various insurers.
- Some records of increases in rebuild costs significantly beyond inflation levels backing up the claim that this was discussed but nonetheless leaving the property undervalued.
To my mind mistakes were made by multiple parties:
- Previous agents did not value the property correctly
- Subsequent actors acted in good faith assuming the valuation to be correct
- The client queried the valuation at least once and as a result the insured amount increased (but there may be no record of these conservations)
- However, no one made or asked for a proper valuation by the surveyor
Has the client acted in "good faith" or made a "qualifying misrepresentation" and how could this be determined (by the ombudsman or anyone else)?
Does it make a significant difference if the managing agent (client) is a 'professional' property management company that might be expected to know these things vs a right to manage company or owners association?
Likewise would earlier claims made under a previous insurer where the under-insurance issue was not noted be factored in? (for example, if a loss adjustor visited in regards to say an escape of water claim would they be reasonably expected to note the under insurance issue at the time and would that even be relevant if it was for a different broker or underwriter).
It is also unclear (to me) who is responsible for the valuation with buildings insurance. If you consider car insurance. The valuation of a car is typically determined by the insurer using a "glass" guide. A consumer might reasonably expect something similar to apply for building insurance based on property values. For items like jewelry, it appears the person taking out the insurance is expected to get it professionally valued.