Why you should think twice before accepting a cash settlement from an insurance company

By accepting a cash settlement from your insurer for repairs to your home, you could find yourself out of pocket when it comes to meeting the costs of a contractor of your choice.

The following is the standard policy wording from a major direct insurer in the UK.

The Basis of Settling Buildings Claims

1) If the buildings are damaged by any cause under section 1, we will at our option, and subject to the adequacy of the sum insured:

a) manage and pay the costs of repairing or rebuilding the damaged part using our own suppliers; or

b) pay the cost of repairing or rebuilding the damaged part using any other supplier; or

c) make a cash payment which will not be more than a) above.

This particular insurer, along with other major insurers, is making cash offers to policyholders to settle the claim which has been made. Some of these claims are for substantial damage, including water damage and fire damage.

As a policy holder your ability to meet cost of repairs for this damage could be jeopardised if you choose to take this cash payment.

Insurers set up their own home repairer networks. Contractors then join this network and agree to accept lower rates for the works carried out because of the volume of work being provided by the insurer.

However, as a policy holder if you accept a cash settlement from your insurer, it will be matched to these cheap rates. The cost of your claim will therefore be reduced to a below market rate that has been manipulated by the insurance company and it is unlikely your contractor of choice will be able to carry out the works.

Your choice has been restricted and your settlement unfairly manipulated!!


If you have been offered a cash settlement and feel uncomfortable with this, please feel free to call our office for an informal conversation.

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Thames Valley

Suite 220, SK House, Vansittart Estate, Windsor, Berkshire, SL4 1SE.


Suite 220, SK House, Vansittart Estate, Windsor, Berkshire, SL4 1SE.

Jane Smith

Regional Director at Thames Valley Office

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