Energy Guides

HomeCall+ has gone bust: what happens now?

Thursday 26 May, 2011

By Martin Fagan - news@consumerchoices.co.uk

Many people relied on HomeCall+ to cover a wide range of home emergencies, but as the company went bust in May 2011, what should customers do?

The whole point of insurance is to provide peace of mind: if something goes wrong, you’ll be covered. But when the company providing the insurance goes bust, that peace of mind is suddenly shattered.

The news broke on 19 May 2011, that HomeCall+ had gone into administration.

The Blackburn-based company covered domestic plumbing, heating, drainage and electrical failures so its sudden demise leaves customers without protection for a range of home emergencies including boiler cover and gas safety checks.

HomeCall+ charged £126 a year or £11 a month for its Rainbow policy, a service that offered unlimited call-outs for a range of domestic emergencies.

I’m a HomeCall+ customer: what do I do?

Although HomeCall+ has gone into administration and can no longer issue new insurance policies, it can still take monthly payments on existing policies. So if you’re paying for HomeCall+ by monthly direct debit, cancel this immediately.

If you signed up for - or renewed - your HomeCall+ policy before 3 December 2010, then help is at hand.

Customers who signed up before that date have policies underwritten by Brit Insurance, one of the largest underwriters in the London market.

As those policies are already underwritten, they will be honoured.

I signed up after 3 December 2010

Things originally looked rather bleak for customers who had signed up or renewed their policy after 3 December, when Brit Insurance was no longer underwriting the policies.

However, rival HomeServe (www.homeserve.com) stepped in to offer an alternative for stranded customers. For just £1 and proof you purchased a HomeCall+ policy after 3 December 2010, you can sign-up to HomeServe Home Emergency Cover - usually priced at £132 for a year - which will cover you for 12 months.

The package covers the following emergencies:

• External underground drains
• Internal plumbing and drainage emergencies
• Domestic electrical emergencies
• Gas central heating boiler or electrical heating breakdowns
• Lock and glazing emergencies
• Up to £500 per claim
• Up to three claims per year (maximum one for gas).

Holders of a HomeCall+ policy taken out after 3rd December 2010 should call HomeServe on 0800 032 0967 to switch the policy.

Can I get compensation?

HomeCall+ policyholders left in the lurch have every right to be angry, but there is little they can do to vent that frustration at the moment.

Had HomeCall+ gone bust while selling policies that were fully underwritten, it’s unlikely any policyholders would be in line for compensation as they would all be covered.

However, as HomeCall+ had been issuing policies in the full knowledge there was no underwriter in place, which is a fraudulent act, these customers are usually entitled to compensation.

But in this specific case, the Financial Services Compensation Scheme (FSCS) is “investigating whether or not it has a role to play” because HomeCall+ is not yet technically in what the FSCS defines as “default” - as it still remains authorised on the Financial Services Authority (FSA) register.

If the FSCS decides that HomeCall+ is in default, it may seek a buyer for the company’s insurance book, which would mean customers are fully insured by another firm. Alternatively, the FSCS protection, which can pay up to 90% of a claim's value, could come into force.

But it’s still unclear exactly what you could claim compensation for. If you bought a HomeCall+ policy on or after 3 December 2010 but did not claim on it, the FSCS may chose to only compensate you for the premiums you’ve paid on the policy from that date up to the time HomeCall+ went into administration.