Home insurance claims expected to rise by 270% on Halloween, Axa Insurance claims

Halloween is meant to be a bit of harmless fun, but according to insurers 31 October is also the worst day of the year for malicious damage to your home.

House insurance claims are expected to rise by 270% on Halloween, according to Axa Insurance, while Saga claims 3.6 million homeowners will face damage to their properties as some revellers go too far with nasty pranks aiming to deliberately cause damage.

Claims submitted last year on Halloween included broken windows, theft, and damage caused to paintwork by broken eggs. Last year, 15% of 2,044 people questioned by Saga said their house had been egged or flour-bombed on Halloween.

Damage caused to your property by an unknown third party is covered under your home insurance policy, but you should still be vigilant, according to Nick Kidd, head of household insurance at Axa.

“Any sort of damage caused to another person’s property is not only antisocial but also a criminal offence,” Kidd said. “And while insurance can pick up the cost it can’t deal with the emotional trauma.”

It is not just Halloween that has insurers on standby: bonfire night (5 November) is also notorious for malicious damage claims, many the result of firecrackers being pushed through letterboxes.

Kidd said: “Although it is difficult to avoid someone putting something through the letterbox, people should take extra care to ensure windows and doors are locked, garden gates are secured and outbuildings, such as garages and sheds, are locked.”

Axa said that following bonfire night last year the average claim for damage caused by a firework or firecracker pushed through a letterbox was £1,000.

Many people said they turned their lights off and pretended to be out to avoid answering the door to trick or treaters, but police and local councils say it is more effective to display a “No trick or treat” sign in the porch or front window. Many councils and local police stations have printable posters for homeowners to download on their websites.

Police advise homeowners not to open doors to trick or treaters if they feel intimidated by their presence, and to phone 999 should there be any disturbances or incidents outside or on their property.

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FSA investigation finds insurance broker Swinton guilty of serious failings over its sale of PPI

Insurance broker Swinton is to refund more than 350,000 customers who bought payment protection insurance (PPI) after the City watchdog found it guilty of serious failings in the way it sold the cover, it was announced today.

The firm, which has been fined £770,000, will contact the holders of more than 480,000 motor and home insurance policies bought between December 2006 and March 2008 to offer them a refund of the premium paid for the cover, which offers a payout if a policyholder is made redundant or is unable to work through sickness or accident.

The move follows an investigation by the Financial Services Authority (FSA) which found that Swinton was not checking whether customers had any real need for the cover before selling around £7.8m worth of single premium PPI policies.

In addition, the FSA said the broker had not made it clear that PPI was optional and did not properly disclose the cost at the point of sale.

The cost was bundled in with the initial insurance quote and Swinton failed to disclose that although customers were paying £15 or £20 for their policies, the cover only cost £1.21 with the remainder being taken by the broker as a fee.

The FSA said that even though more than 500,000 policies had been sold, only 266 claims were paid out. More than 40,000 customers who were sold policies were not even eligible to make a claim.

Deliberate breach of rules

Swinton stopped selling PPI in March last year following a request from the FSA when the failings came to light. It will now contact customers to offer them their money back. The FSA said that by agreeing to settle at an early stage Swinton had avoided a larger fine of £1.1m.

FSA director of retail enforcement and financial crime, Margaret Cole, said: “These were deliberate breaches. Swinton was fully aware it should establish a customer’s need for PPI before recommending it, yet nearly half a million policies were sold to customers who didn’t necessarily require them.

“Swinton’s PPI sales fell a long way short of our requirements and the firm clearly failed to treat its customers fairly.”

In a statement Swinton said it was taking the matter very seriously and had set up a dedicated unit to deal with the cases. It said it had written to 40,000 potentially affected customers in 2007 to offer refunds but very few had responded, suggesting they were happy with their decision to buy a policy.

It added: “The company did not deliberately set out to breach FSA rules or to disadvantage customers, and acted in good faith in the development of its sales process which it believed was reasonable and proportionate for the low cost of the product.

“The total cost of the product was disclosed to customers and was in-line with prices charged by other providers in the market for similar products. Swinton believes that the vast majority of its customers understood that the product was optional when offered to them, and in fact less than 50% of its eligible customers purchased the product.”

The consumer group Which? said Swinton had been let off lightly, and that the FSA should have taken action against the firm’s senior management. The group’s personal finance campaigner, Vera Cottrell, said: “This is a truly shocking case. As an insurance broker, Swinton is supposed to give tailored advice to its customers. Instead, it saddled thousands of people with unnecessary and unsuitable insurance.

“Customers should get an automatic refund. Too few people are likely to claim back £15 or £20, which would mean Swinton is getting let off lightly, especially given that the fine imposed by the FSA is just a tenth of the revenue it generated from PPI sales.

“What is more, we think the FSA should take action against the senior management responsible for this systematic breach of the rules.”

Earlier this year the FSA banned the sale of single premium PPI policies because of concerns it was overpriced and difficult for consumers to cancel. It had planned to ban the sale of regular premium PPI alongside other products from October next year, but this was stalled after Barclays bank took the case to court.