Ensure your insurance claim pays out
What can you do to make sure your insurance policy will pay out if you need to make a claim on it? Here are Moneywise's top 10 tips to ensure your claim is successful...
WHEN TAKING OUT A POLICY...
... 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."
If you're unsure what to disclose, it could be worth getting the advise of an IFA. To find one in your local area, go to moneywise.co.uk/findanifa.
... 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."
WHAT TO DO IF YOUR CLAIM IS REJECTED
First of all, get back in contact with your insurer to complain; it should be able to explain why your claim has been rejected and how its complaints procedure works. Insurers have eight weeks to respond to your complaint.
After this, if you still have no joy and you think your claim has been rejected unfairly, you can refer your case to the Financial Ombudsman Service. It's a free service and insurers must obey its decision. You can also take legal action while the Ombudsman is reviewing your claim, but once it reaches a decision, you cannot challenge this.
To contact the Ombudsman go to financial-ombudsman.org.uk or call its consumer helpline on 0300 123 9123. When taking out more complex insurance products, such as income protection or critical illness insurance, it pays to buy it through an adviser.
Kevin Carr, chief executive of the Protection Review, explains: "If you take advice from an expert at the start, it can save you a lot of heartache when it comes to claiming.
If a claim is declined, you're unlikely to be able to complain about the suitability of the product unless you took advice. If you buy direct or without advice you are fully responsible for your decision, so if the policy doesn't pay out when you expect it to, there isn't much you can do."
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.
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.
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.