Man who set fireplace to accommodate by cooking steak in toaster was upset about insurance coverage payout

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A man whose attempt to cook a steak in a toaster started a fire that destroyed his home was upset to find that his insurance policy wasn’t paying as much as he’d wanted it to.

The case was handled by the Complaints System of the Insurance and Financial Services Ombudsman (IFSO), which does not identify either the person complaining or the insurance company involved.

The man decided to make a meal of steak and fries, but chose to cook the steak in a toaster instead of the pan.

While toasting, he left the house to go to the local fish and chip store for chips.

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The fire severely damaged the house he shared with.

Their insurance company paid $ 418,000 for the damage, the maximum that could be paid under the couple’s policy.

However, the couple felt that it would not be enough to replace the house and contacted the IFSO to say the insurer should pay an additional $ 200,000.

They said they did not realize that their policy had switched from replacement coverage to full coverage.

The system disregarded her complaint, saying the insurer had paid the maximum claim and the couple had been adequately informed of the change in their policy.

The couple said they had $ 200,000 below what they needed.

Jan Mika / 123RF

The couple said they had $ 200,000 below what they needed.

Karen Stevens, Insurance and Financial Services Ombudsman, said a misunderstanding of the annual insurance renewal process or the cost of rebuilding her home added the stress of the fire to other preventable ailments.

“Every year, every policyholder receives an extension offer that can supplement or change the policy originally signed.

“I cannot emphasize enough that one must read every renewal letter carefully. Most insurers now offer fully comprehensive insurance, which means that your house is insured at a fixed price. If you don’t do your homework and get your home insured for too little, you may not be able to rebuild your home. The sum insured should be as high as the reconstruction, not the market value.

“Your acceptance of the new terms is often the next payment of your premium.”

Insurance and Financial Services Ombudsman Karen Stevens says online calculators can be a guide to how much coverage you need.

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Insurance and Financial Services Ombudsman Karen Stevens says online calculators can be a guide to how much coverage you need.

She said people who weren’t sure how much coverage they would need to rebuild their homes could use online calculators as a guide.

“Online calculators are no substitute for an insurance valuation by a registered appraiser or a house valuation by a building expert. We recommend that you consult the experts if you are not sure. “

Tim Grafton, chief executive of the Insurance Council, said almost all policies were changed from full replacement to insured after the Canterbury earthquake. But since then, many policies have taken the step of offering complete replacement protection for fire.

“[The Insurance Council] Did your research a few years ago and about half of the people didn’t understand that the sum insured should be the cost of rebuilding your home – not the market value, what you bought it for, what you think is worth, not the valuation.

“Our advice about the sum insured is to use the calculators and try some of them. Things like hard-to-reach areas, retaining walls, or location on steep slopes can add to costs. When in doubt, your house is often your greatest asset, so spend the money on an expert who will calculate the remodeling costs if you have unusual features. “

Stevens said in this case the original fire incident itself was preventable.

“Cooking steak in a toaster is literally a recipe for disaster. To have left the house and the toaster unattended for the sake of the hot fries is a constant regret. Never leave cooking unattended, even if you think it will only take a minute – and please use your appliances for the purpose for which they were intended. Toasters are for toast. “