Questions of Cash: The Independent

Posted on October 1, 2011 · Posted in The Independent

Q. I won £25 on a premium bond in June.  The cheque from National Savings and Investments was paid into my NatWest account on 17 June. On 22 June NatWest wrote to me saying the cheque had not been cleared – it had bounced. I was promised it would be represented. After 10 days I phoned and was told it would be represented immediately. After another 10 days I phoned again and was told the cheque had again bounced. I phoned NS&I, which said the cheque had cleared its system. SG, Hampshire.

A. As you probably guessed, the error was with NatWest, which failed to clear the cheque properly. Our national finances are not yet in a situation where a £25 cheque drawn on the Exchequer should bounce. A spokeswoman for NatWest says: “We’re sorry for the delay in [the reader] receiving cleared funds on this occasion. This was due to an error that occurred while processing one of his cheques.” NatWest apologises and has now credited your account with the missing £25, plus another £50 as compensation.

Q. My mother’s house is suffering from subsidence. In 2008 her insurers, Lloyds TSB, surveyed the property and deemed the movement ‘historic’ and dismissed her claim. The cracks in the brickwork grew wider and in 2010 she commissioned a chartered surveyor to examine the property. He advised that the only solution was underpinning. The insurers agreed to re-open the claim and their surveyor then reported that, upon re-examination, there was fresh movement and this was due to shrinkage in the clay soil being exacerbated by the roots of a large oak tree at the bottom of the garden. They want this removed before any remedial work is undertaken, but insist my mother foots the £3000 bill for its removal. There is no mention of this being an ‘exclusion’ in the policy. Lloyds TSB remains adamant that an 86 year old widow living on a state pension has to pay for tree surgery that is not guaranteed to solve the problem and is in contradiction of the findings of her own chartered surveyor. KH, Reigate.


A. At our request, you referred back to the surveyor your mother engaged, who expressed “surprise” at Lloyds’ expectation that your mother should now have the tree removed and pay for this herself. He also confirmed his opinion that the tree is not the cause of the subsidence. Lloyds has now appointed a consultant to review the claim and the insurer’s response. We are promised that this will happen quickly.

Q. My daughter has had her car insurance premium almost double on renewal to £800. She is a mature driver with 20 years’ experience. She was the owner of a BMW 1.8D Sport, which was bought in 2007 from a main dealer when just one year old. It has been regularly serviced by them. In August last year in the early morning her car gave out an exploding noise and caught fire, while parked outside her flat, and was destroyed. My daughter had to find the money for a new car and her premiums have jumped. She seems to have been shabbily treated. BG, High Wycombe.

A. It remains unclear what caused your daughter’s car to spontaneously ignite, despite the car having been taken away for examination. BMW says that it is normal procedure in such cases for a car to be investigated initially by the insurers, before passing it over to the manufacturers if the insurer believes there might have been a fault with the car. A spokeswoman for BMW says: “The fact that the insurance company never contacted BMW about this incident means that they did not think that the fire was caused by a manufacturing fault.  If they did think that BMW was at fault they would not have agreed to pay the claim and would have insisted that BMW take the cost.” BMW subsequently agreed, at your daughter’s request, to examine the car, but because it had been stored by the insurer outside the vehicle’s condition had deteriorated and a proper examination was not possible.

However, there is a significant difference between what BMW believes to have happened and what your insurer, Elephant, tells us. A spokeswoman for Elephant – a division of Admiral – says: “Unfortunately due to the extent of the damage, neither ourselves or BMW were able to confirm the fire was caused by a manufacturer’s fault.” But, she added, the insurer had been in contact with BMW “on a number of occasions” over the incident and its possible cause. “BMW inspected the car five days after the incident, however further down the line they were interested in having the vehicle to see how the components and engine had reacted to fire, but not to inspect the vehicle in relation to the claim as this had already been done. As the vehicle had been stored outside for some time, this investigation would not have been possible and they declined to take the vehicle.”

Elephant says that that your annual premium rose from £621.85 to £878.34 at renewal – an increase of just over 40%.  The increase came about because of the change in vehicle and a change of address, as well as your daughter’s loss of no claims bonus. Elephant says that while it accepts that your daughter was not responsible for the fire, such incidents are nonetheless recorded as ‘fault’ claims. It says this is common industry practice. It would only be able to recover its costs from BMW if it could prove negligence by the manufacturer, which was not possible with this incident.

The insurer says that its claims handler followed all procedures properly and that “on the whole, [the reader’s daughter] received good service from us”. But it does accept that it could have “communicated better” with your daughter and should have dealt with the claim quicker. On the basis of this, it will reinstate your daughter’s two years’ no claims bonus and will accordingly reduce her premium for this year to £756.44.