10 ways to ensure your insurance claim pays out
Last November, when the house of Kathryn Mills-Webb and her husband Tom were burgled, they expected to be able to claim back most of their stolen possessions through their home insurance policy.
The couple had hundreds of items stolen, with a total claim value of around £9,000. But the stress of going through everything meant Tom and Kathryn didn't immediately notice that a mobile phone was among the missing items.
The phone, on a monthly £10 T-Mobile contract, hadn't been used for the previous four months. They kept it as an emergency mobile as Tom, a financial planning analyst at Sainsbury's, used a different one for work.
"Tom contacted T-Mobile when £1,400 was withdrawn from his account for charges incurred in the 72 hours following the burglary, which was when he became aware of the theft for the first time."
But when the couple contacted their insurance provider about the phone they were told their home insurance wouldn't cover these charges because they were not for the value of the phone itself and so only indirectly connected to the burglary.
While this case is an extreme one, it highlights the unfortunate situation you could find yourself in - that of making an insurance claim, only for it to be turned down unexpectedly.
Sadly, this is more common than you might think. One of the main reasons an insurance claim is turned down is because the customer has failed to give their insurer all the information it needs. This is called 'non-disclosure'.
The non-disclosed information must be important enough to mean that the terms of the policy would have been amended if the provider had been aware of it - for example, the item would have been excluded, you would have been given a more expensive premium, or cover would have been declined altogether.
While in most cases, non-disclosure happens because the customer simply isn't aware they need to provide the information or thinks it's irrelevant, in rare cases it's done on purpose for financial gain, either to lower premiums or receive a higher payout.
Other reasons for rejection
Claims can also be rebuffed if the insurer feels you haven't taken sufficient care or paid enough attention to your insured items or service.
For example, a lot of mobile phone insurers won't pay out if they feel you haven't looked after your phone well enough, whether it be by dropping it one too many times or leaving it unattended.
So what can you do to make sure your policy will pay out if you have to make a claim on it? Here are Moneywise's top 10 tips to ensure your claim is successful.
When taking a policy out...
... Don't just opt for the cheapest
In the insurance market it's too easy to be driven by price alone, but the first thing you should do is find a policy that provides the cover you need. Check what comes as standard and what doesn't.
Choosing a cheap-as-chips policy that covers you for very little is pointless – for example, some of the cheapest travel insurance policies don't cover lost luggage or missed departures.
High excesses, where you pay part of the claim yourself before the insurer pays out, could also render a policy useless if you can't afford to pay them.
... Always read the smallprint
One of the most common reasons claims are rejected is because the policyholder has failed to read the documentation and only realise something is not covered when they come to make a claim. Don't forget to read your documents carefully to ensure you understand your policy.
... Keep receipts
Mike Powell, head of insurance at Defaqto, recommends keeping evidence of valuable items for home insurance and travel. "Keep receipts of any goods you've bought recently. If an item's pretty new, the insurer might ask for these [receipts] as proof of purchase," he says.
Taking photos is another way of proving not only an item's value but also that you own it. Insurers are cynical of customers putting in pricey claims that don't seem to fit with the rest of their possessions, so some form of proof will boost your claim's credibility.
... Provide as much information as you can
As well as being honest, try to disclose as much information as possible.
For example, when applying for income protection or critical illness insurance, if you've suffered from a medical condition in the past – even if it's something that you haven't suffered from recently – you may still need to disclose this.
Kevin Carr, chief executive of the Protection Review, a protection research consultancy, says: "If you have seen your GP or a consultant about any specific health issue in recent years it should be disclosed. I always say: if in doubt, write it down."
... Report any changes
"With any change, it's up to you to notify the insurer, and you need to do so at the earliest point," warns Will Thomas, head of car insurance at price comparison website confused.com.
For example, home insurance policies have single-item limits of approximately £1,000, so if an item rises in value, let your provider know in to ensure it's still covered.
If you need to make a claim...
... Don't exaggerate or tell fibs
Whether you're adding on an extra nought to the value of your claim or ignoring the fact that it was you who drove into the back of the BMW rather than Mr Flash reversing into you, lying when making a claim could instantly render it useless.
Thomas cites dishonesty as one of the main reasons car insurance claims are rejected: "It's mostly down to insurers finding out you haven't entered into an honest agreement. They then will either repudiate the claim or still deal with it but slap on harsh penalties."
... Act quickly
Making your claim quickly also ensures that the details are fresher in your mind and the insurer won't struggle to chase up information.
"It varies from policy to policy and between insurers, but most providers will have in their policy wording something about deadlines and when you have to make a claim. It's usually around 30 days," says Powell.
If you delay making a claim, not only will the whole process take longer but insurers are more likely to question why it has taken you so long. Also remember that if an item has been stolen you need to report it to the police within 24 hours, otherwise your claim will be rejected.
... Collect evidence
In the event of an accident, you should provide as much information as possible to increase your chances of success.
If you're involved in a road incident, take photos of what's happened and any road signs, as well as the general scene to show the weather conditions and level of traffic.
If you've suffered a break-in, flood or fire damage to your home, or had an accident on holiday, again, photos are a useful tool.
"Having all that information together as a package paints a picture for insurers and stops the claim going through different departments," says Thomas. Eyewitness accounts are also helpful, so ask people on the scene for their contact details.
... Always follow your insurer's protocol
With emergency home repairs, always remember to contact your home insurer before calling out someone to fix it.
Some providers require customers to use specified tradesmen or they might even want to investigate the damage before they'll pay out. If you fail to do this in the right order, it might invalidate your claim.
... Chase it up
With any insurance claim, don't put in the claim form and then just leave it.
You'll most probably need to follow up with phone calls, so, in order to make the process less stressful, make copies of any paperwork you receive or send, and make notes of the times and dates of any calls you make, and who you've spoken too.
Powell also suggests asking your insurer at the outset how long it should take for the claim to be processed: "You need to ask the insurer the timescale. If you expect it to be two weeks and call up and they say six weeks, at least you'll know it's going to take longer."
A financial adviser who is not tied to any financial services company (such as a bank or insurance company) and is authorised by the Financial Services Authority (FSA). They can advise on financial products to suit your circumstances. All IFAs have to give consumers the choice of paying by fees or commission and have to explain which would best suit the customer in that particular instance. Also, if commission is paid either by the client or the financial service provider recommended by the IFA, the IFA must disclose what that commission is.
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.