Six ways to ensure your car claim isn't rejected
Despite paying their premiums year in and year out to their insurer Great Benefit, a couple whose child suffers from leukaemia is cruelly scuppered by the small print in their health insurance policy when they came to claim for life-saving treatment.
This central plotline of the John Grisham US legal thriller The Rainmaker may be the stuff of fiction but the story rings eerily true for many policyholders.
Real-life examples of rejected claims regularly make the headlines.
The case of Nic Hughes, for example, attracted the support of celebrity tweeter Stephen Fry recently when he heard that the 44-year-old father of twins had a life and critical illness insurance policy cancelled by Friends Life just months before his death from gall-bladder cancer last October, on the grounds of alleged non-disclosure of symptoms. The case is now in the hands of the Financial Ombudsman service (FOs) after the insurer stood by its refusal to pay out.
And even when a claim is successful that is not always the end of the matter. Churchill insurance is appealing to reduce a £5 million award made to Bethany Probert, a teenager who was knocked down and seriously injured by a car driven by one of the insurer's policyholders.
The insurer admits its customer's liability but says Bethany contributed to the accident by not wearing a high-visibility jacket while walking along a dark country lane.
These are just two prominent cases, but many policyholders battle on a daily basis to get claims, big and small, met in full or paid promptly. And the current economic climate, paired with tough competition in the insurance market, is seemingly encouraging insurers to get tougher still on claims.
Gripes about insurance
A report published in January by the British insurance Brokers' association (BiBa) asserts that the economic challenges and the rise in fraud is forcing insurers to take an ever finer toothcomb to claims, with two-thirds of brokers confirming they had to work harder to get claims paid and three-quarters stating they had helped to overturn a rejected claim in the past year.
This hard-nosed trend is supported not only by the rising numbers of complaints to the FOs, but the fact that a large proportion of them are upheld.
Gripes about insurance rose by a third to 27,643 in the financial year 2011/12, excluding payment protection insurance, and the ombudsman confirms that around half of all decisions on general insurance (such as home, travel and car insurance) complaints go in favour of the customer.
Martyn James, spokes person for the FOS,says: "Many of these complaints are being driven by the difficult economic climate, as more people take advantage of their insurance policies where previously they may not have made a claim. If they have accidentally damaged a sofa, for example, they might have just bought a new one, but now they claim.
"Interestingly, we have not seen an increase in the number of ‘fraudulent' claims. We've also seen a more entrenched stance by both consumers and businesses – with both parties fighting their cases harder than in previous years."
The Association of British Insurers (ABI), which represents the insurance industry, rejects assertions that its members are clamping down. ABI spokesperson Malcolm Tarling says: "We refute any suggestion that insurers are work tightening up on paying genuine claims. Insurers remain committed to paying all genuine claimants as quickly as possible, while at the same time protecting the interests of honest customers by cracking down on fraud."
The battle against fraud is understandable, but even honest policyholders find they are having to be more persistent, especially if they take their complaint to the ombudsman, which can take months to be resolved.
Neil Bresler, managing director of Cherish Insurance Brokers in Bradfield, says problems have arisen because of the length of policy terms and conditions, which a decade or so ago may have translated into a contract of just a few pages compared to today's huge tomes, which typically go unread.
He says: "Insurers have tried to clarify terms by adding more words but they have become incredibly complex legal documents and cause more problems than they solve." Different interpretations of these clauses can lead to a claim's rejection or a lengthy delay in paying out.
Bresler adds: "In a recent case, I had a student whose laptop computer was damaged when a flatmate spilt coffee on it while he was out of the room. The insurers pointed to the clause that said the policyholder had to be ‘in custody and control' of the computer and that this wasn't the case because he wasn't in the room.
"But this clause is really aimed at someone leaving their laptop unattended at an airport while they go to the toilet. We argued that it was enough that the student was in the property and the insurer agreed and paid the £400 claim."
BIBA's survey revealed nearly 70% of brokers secured a higher payout for a client when they intervened, with 43% suggesting they could negotiate an improvement of between 11 and 20%.
Reputable brokers can offer support with claims but they can also help consumers check that they are properly covered.
Brian Walters, principal of Cheltenham-based health insurance brokers Regency Health, says: "A common pitfall with medical cover is forgetting to mention GP visits for something minor that later comes back as something more serious. We've also seen clients who thought they had a comprehensive plan but actually had stripped-down cover, and people living in central London without cover for London hospitals."
Reasons your claim might be rejected
- Non-disclosure. For example, of a medical 2condition when taking out travel insurance.
- Breach of a warranty. For example, failing to switch on the burglar alarm when it is a condition of your policy to do so.
- Underestimating the value of your possessions for contents insurance.
- Non-payment of premium.This could happen 5if you let the policy lapse in error.
- Failure to inform the insurer of a change in circumstance, such as building an extension or running a business from home.
- Suspected fraud
Policyholders with home insurance, for example, who disagree with the loss adjuster's assessment of a claim can pay for a loss assessor to provide an independent view.
Nick Balcombe, partner at national loss assessor Harris Balcombe, asserts that there is nothing new in insurers taking a tough stance on claims. He says: "It's just the recession that has made people more aware. What has changed is that the process has slowed down.
"In the past, the insurer's loss adjuster often had the authority to settle claims. That's no longer the case. It can take one to three months just for the insurance company to accept liability. You don't get a payment until investigations have been made. The insurer hides behind delay."
Balcombe believes policyholders need to be aware of how changing personal circumstances can affect a claim. He says: "A lot of people who run their office from home, for example, can see claims thrown out because they didn't tell their home insurer."
Making incorrect valuations is another minefield. Balcombe says: "People often underestimate the value of their contents, and insurers may reduce the claim accordingly." This means if you value you contents at 50% of their true value to save on your premium, the insurer may pay just 50% of the value of any claim.
You can improve the success rate of claims by taking these savvy steps:
- When buying a policy over the phone, ask for an email or letter to confirm what has been agreed
- Video or photograph your home and contents room by room, burn it on to a DVD and keep hard copies with a friend or family member
- Keep receipts for all items
- Calculate the correct level of cover or risk a lower payout or no payout at all if you claim
- For travel and fully underwritten health cover, tell the insurer about all pre-existing conditions when buying
- If dissatisfied, press your insurer first, explaining by phone or letter why you think the decision is unfair. No luck? Then ask your broker, if you have one, to assist. Either way, insurers have eight weeks to respond If there is deadlock, go to the Financial Ombudsman Service at financial-ombudsman.org.uk or call 0800 023 4567.
Insurance claims specialists that investigate contentious claims on behalf of insurance companies or policyholders. They investigate at the scene of an incident and establish the causes of the ‘loss’ (damage or destruction of property) and whether it is covered by the insurance policy. They then write reports for the insurer, assessing the validity of the claim and recommend if the insurer should pay out and, if so, how much.
If you’ve have a complaint about a financial service product you have bought but the company you bought it from refuses to resolve your problem after eight weeks, the Ombudsman can help. The Ombudsman will investigate and resolve the matter. The Ombudsman is independent and its service is free to consumers. The Ombudsman may find in the company’s favour but consumers don’t have accept its decision and are always free to go to court instead. But if they do accept an Ombudsman’s decision, it is binding both on them and on the business.
Does exactly what it says on the tin: covers the contents of your home for theft and damage and also may insure certain possessions (jewellery, cycles) outside of the home. Things to watch for include the excess and also the maximum payout on individual items. Another grey area is kitchen fittings, as some contents policies say these are not contents but part of the fabric of the property and covered by buildings insurance and some buildings policies don’t cover them because they regard them as contents.
Association of British Insurers
Established in 1985, the ABI is the trade body for UK insurance companies. It has more than 400 member companies that provide around 90% of domestic insurance services sold in the UK. The ABI speaks out on issues of common interest and acts as an advocate for high standards of customer service in the insurance industry. The ABI is funded by the subscriptions of member companies.
Critical illness insurance
This cover pays out a tax-free lump sum if you become seriously ill. All policies should cover seven core conditions: cancer, coronary artery bypass, heart attack, kidney failure, major organ transplant, multiple sclerosis and stroke. You must normally survive at least one month after becoming critically ill, before the policy will pay out. Payouts are determined by premiums and premiums are determined by the severity of your illness, the less severe the lower the premiums.