Protect yourself - and your wallet - from insurance errors

Published by Dan Moore on 14 September 2018.
Last updated on 14 September 2018

Umbrella

Honesty is the best policy with insurance – you mustn’t lie to get a lower premium as that will invalidate your claim, but that doesn’t mean you can’t drive down the price. Here’s how to get car, home, travel or pet insurance and cut your costs.

Having an insurance claim rejected is a bitter pill to swallow, especially after paying what is likely to have been a pricey premium.

Moneywise highlights some of the more common insurance errors, and explains how to avoid them.

Car insurance

As with any other insurance policy, you must give honest answers to questions asked by an insurer, broker or comparison website when you take out your policy.

Failure to do so will invalidate your cover.

However, there are a whole host of other potential problems that could result in issues later down the line or simply just cost you more from the start.

Read more: Car insurance: are you being taken for a ride?

Don’t pay in instalments

You should avoid paying for an annual policy in instalments if at all possible. This is because insurers charge interest in return for providing cover before you’ve paid for it. The cost difference can be as much as 20%, depending on which insurer you go with.

If you cannot afford to pay the premium as a lump sum, it’s worth looking into opening a 0% purchases credit card and paying for the insurance on this. Ensure you get one that has an interest-free period of at least 12 months, allowing you time to repay the purchase. At the time of writing, there are currently around 25 cards on the market offering 12 or more months interest free.

Armed with one of these cards you can buy your annual insurance in one go, so avoiding the monthly interest charges. Just be sure to make the minimum monthly payments to avoid charges, and clear what you owe before the 0% deal ends.

Rest assured, insurers will check for errors when you claim

Avoid auto-renewals

However you choose to pay for your premium, it’s a big mistake to just automatically renew when your current insurer sends out a quote for the next 12 months. Unless you are very fortunate, the chances are that you are not with the best or even the cheapest insurer on the market.

For example, a simple check on a price comparison website revealed the difference between the best and worst price for a six-year-old Ford Focus driven by a 30-year-old south London-based male account manager could be almost £4,000.

Beware of ‘fronting’

Pretending that someone else is the main driver on your car in order to get a lower premium is fraud and often leads to a criminal conviction, a fine of over £5,000, six points on the licence or even an outright ban. Court cases typically involve young or inexperienced drivers, or those who cannot get low-cost insurance due to previous motoring or criminal convictions.

Rather than risk getting a record, speak to a specialist insurer or a broker. They may well be able to source more affordable cover.

Declare penalty points

One other common mistake drivers can make is to ‘forget’ to declare they have penalty points on their licence. Do so and you risk a fine, further penalty points and your uninsured car being scrapped.

This is not a small matter; a recent survey by motoring organisation the RAC revealed that around 650,000 people admitted to not disclosing penalty points when applying for insurance. Rest assured, policy providers will check this out in the event of a claim.

Three top tips to help your insurance claim

Insurance is all about protecting yourself, your family and your belongings. Here are three important things you can do to help you avoid any hassles when making a claim.

1 Take copies of your travel insurance policy documents with you on holiday, or at least have them saved as email attachments.

2 Check your bank account. You may have a packaged account that comes with travel insurance. If so, why pay for additional cover?

3 Finally, be calm. If you need to make an insurance claim, think through what you want to say. Insurers record phone calls and will flag up any discrepancies in what you tell them. No-one means to mislead, but under stress this can happen.

Home insurance

Here are two common errors to avoid with your home insurance policy.

List any modifications

With a car this is relatively obvious – you should know if your car has alloy wheels or you’ve beefed up the engine. However, it’s more complicated with a house. How many of us know exactly what proportion of our home’s roof is flat? And who has measured how close your boundary wall is to the nearest tree? If it’s too close you could have problems with insurance, especially if it’s roots are causing problems with foundations.

Certainly if you use an online comparison site, you could well find yourself unable to source cover if you reveal your home has a largely flat top. Art deco pads, bungalows and prefabs could all fall foul of this restriction, so you may need to seek specialist cover.

If you’ve wrongly identified your door lock, your insurer won’t be forgiving

Check your locks

While you are flying through comparison site questions, it’s very easy to alight on the wrong answer when asked about the type of locks you have on your doors and windows. But if you are burgled and you’ve wrongly identified your front door lock as a five-lever mortice lock rather than a nightlatch, for example, your insurer won’t be so forgiving.

Pet insurance

Pet insurance is either an elixir or snake oil, depending on your experience. Plus, certain animals and breeds are more susceptible to particular health problems than others. Labradors, for example, are prone to joint problems that can leave them incapacitated at a relatively early age.

Read the small print

It’s important to check your pet insurance document is correct and carefully read the small print when you sign up. Exclusions that include the type of claim you’re likely to make on your pet’s behalf could make all the difference – plus check where your provider stands on pre-existing conditions.

Travel insurance

Of all the policies it’s possible to take out, travel insurance is arguably the easiest. Travel insurers need relatively little information from you to provide cover, usually just your name, age, and where you’re travelling to. Any special requirements, such as extreme sports, should be disclosed.

Disclose pre-existing medical conditions

Pre-existing medical conditions should always be disclosed. If you have high blood pressure, heart problems, even asthma, you must tell your insurer. It will cost you more to secure good cover, but probably much less than you think.

A 40-year-old with high cholesterol would only pay £1 more for a week’s cover for a holiday to Spain than someone with no health issues.

Things get far trickier if you have, or have had, cancer, but there is a solution. Pam Quinn, head of communications at the British Insurance Brokers’ Association, explains: “It’s hard, but you must declare any medical condition. Specialists brokers will be able to help.

“Going on holiday should be a break from chemotherapy, for instance. Brokers can help by ensuring that whatever stage you are at you will have a hospital nearby that you can access. It’s this peace of mind that can make the difference and allow you to relax.”

Check the government’s travel advice

Always check the Foreign and Commonwealth Office (FCO) advice on Gov.uk/foreign-travel-advice and ensure you don’t stray into regions that are off limits or do something that is likely to get you into trouble, such as taking photos of demonstrations, military or police activities, or getting drunk in public.

Go against FCO advice and your insurer may reject any related claim.

Also, if you are travelling through or to a region that the FCO warns against visiting, contact your insurer beforehand. You should be able to upgrade your policy for a small sum.

Read more: Travel insurance: our 10 top tips

How a pre-existing condition caught out one pet owner

Karen Howse, 39, is a senior financial consultant at a major high street building society. She lives in Wiltshire with her five-year-old daughter Ezra and her dog Dig’b, a shar pei she bought for her son Caleb, who has sadly since passed away.

When Dig’b was a puppy, Karen got him microchipped and took out pet insurance, at a cost of £40 a month. However, after getting him microchipped, the vet practice wrote to her to say that Dig’b had a skin complaint. While this breed is prone to such conditions, Dig’b was a healthy puppy and Karen didn’t see any signs of a problem.

But in late spring the next year, Dig’b did develop a rash and Karen took him to the vet. After a series of treatments, she received a bill for almost £700, which she passed on to her insurer, only to have it rejected because of the vet practice’s letter about the pre-existing skin condition.

Karen was allowed to pay the bill in instalments, but was furious that an over-zealous veterinary assistant had cost her so much. She cancelled the insurance and opened a savings account, depositing £20 a month for her pooch.

She says: “I’ve had to dip into the savings account once since then, when Dig’b nibbled into his paws. It cost me a fair sum, but I paid for it all in cash, without the hassle of involving an insurer, and I can’t say I’ve regretted my decision.”


DAN MOORE is a freelance personal finance journalist who has written for The Times, FT Adviser and the Money Advice Service

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