Saving on Claims Costs: The Role of the Insured

A recent home insurance case illustrates how a policyholder’s initiative can reduce the cost of a claim, while also raising the question of flexibility in compensation. Caught between a strict contractual framework and the principle of fairness, the role of the Insurance Ombudsman proves to be decisive.

An irreparable duo… or almost

After suffering a fall, an insured person’s tandem bike was severely damaged. His home insurance policy included coverage for damage to sports and recreational equipment. The adjuster appointed by the insurer concluded that the bike was beyond repair, and the insurer offered compensation based on its replacement value.

Rather than accept this costly solution, the insured chose a different course of action. He traveled directly to Germany, to the manufacturer’s factory, to pick up the replacement parts needed for the repair. As a result, the tandem can be repaired for less than the replacement cost initially estimated. The insured then requests reimbursement for the parts and labor, as well as coverage for his or her related travel expenses.

The insurer agrees to compensate for parts and labor covered by the contract but refuses to go beyond that, in accordance with the principle of indemnity (Article L.121-1 of the Insurance Code) and the contractual limit set forth in Article L.113-5.

Reinforcing the Principle of Equity

Although the denial was legally justified, the insured’s initiative nevertheless made it possible to significantly reduce the insurer’s overall cost of the claim. After the case was referred to him, the Insurance Ombudsman therefore urged the insurer to pay fair financial compensation in recognition of the insured’s exemplary conduct. The insurer accepted this solution, even though it was not provided for in the contract.

This case serves as a reminder that, even though insurance law is based on a strict contractual framework, flexibility and fairness can still play a role in the resolution of disputes. The Ombudsman also recommends that insurers take all circumstances into account, particularly when an insured person’s initiative helps reduce the financial burden of a claim.

This case study shows that compliance with the rules does not preclude a certain degree of flexibility. For policyholders, it highlights the benefits of being proactive; for insurers, it underscores the value of a more comprehensive and equitable approach to claims settlement. To ensure you understand it correctly, the easiest way is to work with an expert, such as an insurance broker!

 Sources: Insurance Code (Art. L.121-1 and L.113-5), Insurance Ombudsman.