This ruling will be welcomed by many people who have had a camera or other valuables stolen, for example, on holiday. But it is likely to be treated with dismay by insurers, who may well see it as a licence for fraud.
"Insurance policies should cover not only those who keep good files but the majority of us who don't," says Walter Merricks, the Ombudsman.
The Insurance Ombudsman Bureau arbitrates where policyholders are unhappy with the money offered to settle their claims. Its decisions are binding on insurers.
Last week the IOB published its annual review for 1996, during which insurers were required to increase their payouts in 2,000 cases, giving these people an average of pounds 5,000 and as much as pounds 270,000 in one case. The Ombudsman, whose service is free to policyholders, concluded that higher payouts were justified for around one in three complainants.
Mr Merricks says some insurers have been insisting on receipts or instruction manuals as a way of avoiding payment because they doubt that an incident like a theft took place. But demanding an "unreasonably high standard" of proof of ownership as a way of reducing the cost of these claims is unfair, he says. Where the insurer has accepted that an incident took place, whatever its initial doubts, it has to face the full financial consequences of the claim. He suggests that with a theft abroad, a police report may well be enough to ensure a claim should be settled in full.
The Ombudsman is also calling for telephone insurers to record all calls after a number of complaints about insurers not pointing out exclusions and other disputes about who said what. He is concerned that insurance staff are overly motivated by sales targets - "the greatest single cause of the problems faced by the financial services industry", as he puts it.
In one case an insurer assured the Ombudsman that anyone who had not held a full driving licence for 12 months would be told over the telephone that its policy would not cover them for driving other cars. The complainant said he was not told this and to prove his point he asked a friend to phone for a quote and to pretend that he had only passed his test five months previously.
The Ombudsman made awards totalling more than pounds 10m last year, the lowest of which was just pounds 5. The insurance Ombudsman no longer handles complaints about life insurance (these are covered by the Ombudsman for the Personal Investment Authority), and last year there was a slight reduction in the number of car, house and other general insurance claims on which consumers required rulings.
This may in part reflect the fact that insurers are becoming fairer and more efficient. But the Ombudsman is also concerned that people may be put off by the paperwork involved in making a complaint. Telephone inquiries to the Ombudsman's office increased 80 per cent to more than 50,000 last year but only a small proportion of these pursued a complaint.
Consumers should note that not all insurers are members of the Ombudsman scheme. It is best to choose an insurer that does belong, even though there are other arbitration-type schemes around.
Policyholders do not have to pay a fee to go to the insurance Ombudsman and even if he backs the insurer you can still take your dispute to court, whereas the insurer is bound by awards of up to pounds 100,000.
But you must exhaust the complaints procedure of your insurer first.
q The Insurance Ombudsman Bureau is on 0171 928 7600.
THE WISDOM OF THE OMBUDSMAN - RECENT RULINGS
q A man took out travel insurance for a fortnight's holiday in continental Europe but cancelled the trip when his elderly mother died the day before he was due to go. The insurer turned down the pounds 1,000 claim for the cost of the holiday because the policy excluded cancellation claims that related to pre-existing medical conditions. The insurer argued that the son must have known that his mother's death was imminent. There was no medical or other evidence to support this, and the son argued that he would not have gone away in that case. The Ombudsman found in favour of the customer.
q A householder removed the flagstones from his kitchen floor and installed new flooring. He left the flagstones outside, intending to use them for a new patio. They were stolen. The insurer turned down the pounds 500 claim because the flagstones were not considered part of the building or its contents. The Ombudsman backed the insurer because the flagstones were left outside.
q A young driver lent his car keys to a friend (who did not have a licence) so that the friend could entertain his girlfriend on the back seat. Instead, he drove the car and wrote it off in an accident. The owner of the car claimed for theft of the car, arguing that he had not given his friend permission to drive it. The insurer turned down the pounds 5,000 claim, on the grounds that the friend had not stolen the car (although he was convicted of "aggravated vehicle taking"). The Ombudsman backed the insurer.Reuse content