How do insurers decide how much a claim is worth?

By applying the policy's basis of settlement to an assessed loss, then deducting anything the policy allows. The figure is rarely what you paid or what you feel it is worth.

The sequence, broadly:

Establish the policy responds. The loss must be caused by an insured peril, within the policy period, with no exclusion applying.

Assess the loss. For small claims this may be documentary. For larger ones a loss adjuster — appointed and paid by the insurer, though obliged to act fairly — inspects, investigates cause, and reports. You can appoint your own loss assessor to act for you, at your cost, and for large or contested claims this often pays for itself.

Apply the settlement basis. New for old replaces with equivalent new; indemnity deducts for wear and depreciation; motor claims use market value at the moment before the loss.

Apply limits and sub-limits. Single-article limits catch people constantly — a policy may cover £50,000 of contents but cap any individual item at £1,500 unless specified.

Apply average if underinsured, reducing the settlement proportionately.

Deduct the excess.

What insurers use to value things: trade pricing and replacement suppliers rather than retail, which is why a cash settlement is often lower than a replacement offer — the insurer's buying power is real and they may offer you the replacement instead. For vehicles, valuation guides and comparable advertised examples.

Where claims commonly go wrong:

No evidence. Photographs, receipts, serial numbers and an inventory transform a claim. Without them you are arguing from memory.

Betterment. If repair leaves you better off than before, insurers may deduct a contribution.

Challenging a valuation works more often than people expect. Provide comparable evidence — advertised vehicles of the same age, mileage and specification, or quotes for equivalent items.

If refused, escalate through the insurer's complaints process, then the Financial Ombudsman Service, which is free.