Hypothetical Insurance Question

[barry1010]

Insurance is intended to put a person back to the position they were at before the incident - neither lose nor profit.

I often see fundraisers (using GoFundMe or similar) after house fires, burglaries etc and it has got me thinking. If the insurance state it should cost £30k to rectify the situation but the insured has already received £50k from fundraisers is the insurance company still bound to pay out?

[douglas9401]

The premium is paid, the payout is due.

[THECORBYLOON]

As they have paid to be insured, why would the insurance company not be expected to honour the terms of the policy and pay out?

[barry1010]

Because the insurance company could argue that the insured has not suffered a loss

[CrapAtCryptics]

Maybe more people should buy adequate insurance rather than getting other people to pay for their lack of sense.

[Old_Geezer]

If the insured won the lottery, would they still not have suffered a loss ?

[barry1010]

If my car were stolen I would claim on the insurance and I would receive a pay out. Should the police recover it afterwards, the car belongs to the insurance company. If they recover it before the pay out, the insurance will pay me nothing because I have not suffered a loss (even though my car was stolen).
Do you see the point I am trying to make?

[barry1010]

Crapat, very often these GoFundMe appeals are set up immediately after the event by friends of the affected who have no idea if they are insured or not. They just want to show the world what a wonderful person and great friend they are (cynical, me? Never).

[THECORBYLOON]

If a very good pal were to give you a car to replace the stolen one, would you expect the insurance company not to pay out?

What about all the money you paid over the years to insure the stolen car?

[barry1010]

I would expect the insurance company to pay out, Corby, but I know how the insurance companies prefer not to pay out.

[barry1010]

If you were to accidentally have two insurance policies for one car (it can happen) and made a claim it would be a very long, drawn out process as each insurance company would say the other should pay out (it would be fraud if you claimed off both). Even though you have paid for two insurance policies you can only claim off one because insurance is to 'put you back to the position you were in before'.

[barry1010]

Old-Geezer, regarding winning the lottery, the claimant would still have won the lottery even if his house had not burned down. The GoFundMe appeal was set up purely because his house had burned down and he would not have received £50k had it not.

[Old_Geezer]

Not really relevant is it though. Had they set up an appeal for something else they'd still have the money. It's still a separate issue. Suppose a relative or friend gave them the money to repair/replace, are the insurance folk off the hook then ?

[barry1010]

O-G, the insurance company wouldn't know about friends or relatives giving them the money. They can find out about GoFundMe appeals, though