ABI warns against travel insurance fraud
Dishonest holidaymakers have been warned against making fraudulent travel insurance claims.
The Association of British Insurers (ABI) says anyone caught cheating on their travel insurance will face higher insurance costs; problems in obtaining other insurances; more expensive credit, and possible prosecution.
Last year, travel insurers detected 4,300 dishonest travel insurance claims - over 80 every week - worth £5 million.
The ABI said insurers and overseas police forces are becoming more vigilant when investigating claims in an attempt to crack down on cheats.
Nick Starling, the ABI’s director of general insurance and health, says: "Travel insurance is there to cover you if things go wrong, not to pay for the cost of your holiday.
"The vast majority of claimants are honest, but the dishonest few are in for a nasty and expensive shock this summer. Details of fraudulent claims are held on industry databases, which will impact on the cost and availability of other types of insurance, such as motor and household, and affect an individual’s credit rating."
Steven Williams, head of travel insurance at Confused.com, believes dishonest insurance claims could hit people much harder in the long term if they are caught.
"A fraudulent claim will remain on your credit history for five years, possibly more. This means a dishonest claim for a £200 camera for example, could end up costing a huge amount more additional insurance premiums in the future."
The ABI said potentially suspicious claims include the last minute loss, where items are reported lost or stolen to the insurer very shortly before returning home, with no time to report the loss to the police; and claims for high value items, such as cameras, jewellery and camcorders, where there is a lack of proof of the loss or theft.
However travel insurance provides invaluable protection for legitimate claims, and Williams warns holidaymakers not to travel without it. "Don’t be put off taking out travel insurance. Insurers are obliged to treat each claim with the utmost good faith, and will generally give claimants the benefit of the doubt."
So when the majority of travel insurance claims are genuine, how can you be sure your insurer will pay out if you suffer a loss this summer?
1. Read the small print
Yes it’s long and tedious but it’s important to understand the level of cover and exactly what the policy will pay out for. In particular, look out for the excess amount per item and the maximum individual limits per item; the level of medical protection and any exclusions to the policy. You should also check whether cash is covered and how much, and if loss is covered in addition to theft. If you plan to take part in extreme sports such as skydiving, you may require additional cover.
2. Keep a record
Receipts for possessions such as iPods, cameras and phones are the best proof of ownership if the items get lost or stolen, but Williams acknowledges that many us of may not hang on to them for long. "So make a note of what you take and try to track proof of purchase through bank statements or credit card bills. Photos can also act as evidence; a photo of you wearing your stolen Rolex for example, can be included with your claim," he says.
3. Report the incident
If something does go wrong, call the insurer immediately to log the claim and check what you have to do next. Take a copy of the policy with you and follow it carefully to avoid delays. "If any of your possessions are stolen, immediately contact the local police, hotel management or tour operator and get written confirmation of the loss," advises Liz Neild, spokeswoman for M&S Money.
4. Follow instructions
In the event of a medical claim, when large sums are often involved to cover medical expenses, it’s even more important to follow your policy instructions to the letter and phone your insurer for guidance if you’re unsure. Make use of the European Health Insurance Card if you have one, and keep receipts of any treatment or medicine you receive.
5. Follow up at home
If you haven’t done so already, fill in the claim form when you return to the UK. Provide as much detail as possible, and include all your supporting evidence. Keep hold of correspondence between you and the insurer, and record the details of all phone calls.
6. If your claim is rejected
Suspected fraud isn’t the only reason your claim may be rejected; the most common grounds are that you are simply not covered for something or a legal technicality in the small print. You can approach the Financial Ombudsman Service for advice, or appeal to the insurer yourself, providing any additional information or evidence to support your claim.
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.
This is more usually a feature of car insurance but it can also crop up in contents, mobile phone and pet insurance policies. An excess is the amount of money you have to pay before the insurance company starts paying out. The excess makes up the first part of a claim, so if your excess is £100 and your claim is for £500, you would pay the first £100 and the insurer the remaining £400. Many online insures let you set your own excess, but the lower the excess, the more expensive the premium will be.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.
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.