Will your home insurance pay out? One in five claims go unpaid

House dice

At least 350,000 people had a home insurance claim rejected between 2013 and 2014, according to new data released by the Association of British Insurers (ABI) for the first time.

Claims against wear and tear were the most commonly rejected, as these aren’t covered by home insurance policies.

Other policyholders were let down because they hadn’t “bought the right cover”, says the ABI. For example, they weren’t insured for events such as accidental damage, which isn’t covered by most home insurance policies as standard. Some also had claims turned down as the value of the claim was less than the excess – which is the fee insurers take from your payout.

 However, 79% of home insurance claims were successfully paid during 2013 and 2014. And for those who did make a successful claim, the average pay out was £2,520 - around nine times higher than the average buildings and contents policy at £290/year.

Read some real stories about making home insurance claims from readers of Moneywise here

What about travel and car insurance claims?

The ABI’s analysis of insurance claims also shows that 13% of travel insurance claims went unpaid, mainly due to cancellations not covered by policies, people not disclosing pre-existing medical conditions, customers being unable to prove lost items, and small value claims of below the excess.

The average payout for a successful travel insurance claim was £889.

Car insurance holders were less likely to be let down by their insurer, with 99% of claims being paid. The average value of a claim was £2,160 and one-in-ten policyholders made a claim in the last two years.

Read '10 secret ways to slash your car cover'. 

‘Buying insurance should be about ensuring you have the right product’

Huw Evans, director general at the ABI says: “As insurers, we want our customers to have greater trust in us to pay claims when life gets difficult. We cannot earn that trust without being more transparent about how many claims are paid and why a minority of claims are usually declined. That is why the figures we are publishing today are so important.”

Mr Evans adds: “Contrary to popular belief, insurers want to pay honest claims. It helps nobody when customers have bought the wrong product or have not disclosed important information.

“Buying insurance should never just be about getting the cheapest price in the quickest time possible, it should be about ensuring you have the right product for your hour of need.”

Unhappy with your provider? Complain

If you’re unhappy with an insurer’s decision, the first step is to challenge it directly. It then has an eight-week window to respond, after which point you can ask the Financial Ombudsman Service for help.

The Ombudsman today says it’s received over 4,000 complaints around home insurance already this year. In the last three months of 2015, complaints were upheld in the consumer’s favour in 33% of cases about contents insurance and in 40% of cases on buildings insurance.

Read the 'Moneywise 10 step guide to complaining' here

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