A New Zealand man's attempt to cook steak in a toaster led to a house fire, resulting in a series of challenges that eventually led to his insurance payout.
The man had a craving for steak and chips and instead of using the usual cooking methods, he decided to cook the steak in a toaster.
After placing the steak in the toaster, he went to the local fish-and-chip shop to buy some chips. However, he was unaware that his experimental cooking method would result in a disastrous outcome.
The Insurance Discontent
On getting home, he found his house was on fire, causing significant damage. Luckily, the couple had house insurance, and the insurer accepted their claim, offering a payout of $418,000, which was the most their policy allowed.
The couple weren't happy with the amount given to them. They believed it wasn't sufficient to rebuild their home.
They complained to the Insurance and Financial Services Ombudsman (IFSO), asking for an extra $200,000. In their complaint, they argued they were unaware of changes in their insurance policy which implied replacement cover to the total sum insured.
The IFSO didn't agree with the couple and they upheld the insurer's decision, saying the maximum entitlement, just as with car insurance, had been paid. The IFSO also found that the couple had been told about the policy change.
Karen Stevens, the Insurance and Financial Services Ombudsman, expressed concern about the couple's lack of understanding about insurance renewals and the cost of rebuilding. She said this lack of knowledge added more stress to the fire situation.
Facts about Insurance Policies and Guides
Karen Stevens stressed the importance of reading renewal letters carefully, especially with the trend of total sum insurance.
This type of insurance means your house is insured for a set price, reflecting the cost to rebuild, not its market value. Ignoring this detail, she warned, might leave you unable to rebuild your home properly.
During an interview with Stevens, she emphasized that the sum insured should be what it would cost to rebuild, not what it’s worth on the market.
“Most insurers now offer total sum insurance, meaning your house is insured for a set price. If you don’t do your homework and insure your house for too low a sum insured, you could find yourself unable to rebuild your home. The sum insured should be what it would cost to rebuild, not what it’s worth on the market,” said Karen Stevens.
Stevens also believed the fire could have been prevented before escalating. "Cooking steak in a toaster," she said, "was a recipe for disaster."
She warned against leaving the house and toaster unattended while cooking hot chips and emphasized the importance of never leaving cooking unattended and using appliances for their intended purposes.
"...please, use your appliances for the purpose for which they were designed. Toasters are for toast,” Stevens concluded.