Like many of you, I’ve been trying to shave off a bit of my spending to save money in 2024.
As I made my latest budget it became apparent what I could easily ditch, what was useful but not 100% necessary and what was essential. In the essential column is one financial commitment that we can’t afford to live without: Insurance.
From sickly dogs and cats to storm-damaged flats, insurance is essential to help us pay for the unexpected, unfair and awful incidents that can occasionally happen through no fault of our own. Some policies – like motor insurance – are legal requirements. Others save us from insane bills if something goes wrong, like needing hospital treatment while on holiday in America, for example.
There’s a lot to celebrate about insurance. According to the industry’s figures, a large proportion of claims are upheld. But there is much that needs to improve too. Premiums are up buy 50% or more, way over the current rate of inflation. And insurance contracts can be complicated, random, vague and sometimes unfair.
If you’re one of the unlucky people whose claim is turned down, or you get a partial uphold that still leaves you short, it can be hard to know where to turn. So here’s my guide to what can go wrong with an insurance claim – and how to take things further.
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Before you make your claim
While most insurance claims go smoothly, they can be quite stressful. I was speaking to a reader recently who told me that he felt a bit like he was going to court when making his claim. “I know it’s an entirely legitimate claim” he told me, “But I felt guilty for no reason whatsoever when I called the business”.
He’s not alone. It’s possible to feel a little rattled when making a claim as there are lots of questions to address and you might not know all the answers, like the value of all of your possessions. You might also want to have a pragmatic think about whether it’s worth making a claim. For example, if your sofa gets damaged but your excess is £300 and it’ll cost £350 to get it reupholstered, then you might conclude it makes more sense to just pay for the repairs, rather than claim and end up with higher premiums.
At this point, I am obliged to tell you that if a ‘claimable incident’ occurs, then you are required to tell the insurance company. 'What is a claimable incident?’ I hear you cry! Well, unhelpfully, there isn’t a standard definition. But if something happens that could have led to a claim – like your car getting a minor bump, for example – then you need to tell the insurer even if it’s not your fault. Your contract should explain what these incidents are.
If you decide you do want to make a claim then tell the insurer as soon as possible. You simply need to inform the insurance company of your intent to make a claim and report the incident. Ask them about the process and make it clear if you need some time to compile details for the claim or gather evidence, from police reports to lists of damaged possessions.
Why do insurance claims get turned down?
Dig out your insurance policy. Now take a look at your T&Cs. There’s quite a lot of terms and conditions on there, aren’t there?! Don’t panic. Just because it’s in the contract doesn’t mean your claim will get turned down.
You’re not expected to become an insurance expert to make a claim, though you might want to have a look at the bits of the contract that relate you the scenario you want to claim for. Don’t be put off though. Here's a short guide to some of the main reasons why a claim might be turned down.
Policy exclusions
Insurance is designed to cover you for all kinds of unexpected events. But not everything that can potentially happen. Every insurance policy will have exclusions for a variety of things, from the logical to the obscure. Common exclusions involve:
- Health issues and medical conditions
- Specialist products (classic cars, thatched cottages, etc)
- Previous claims
- Risky activities or behaviour
- Poor maintenance or products reaching the end of their lifespan
- Catastrophe
The latter is a rather dramatic term meaning major incidents that affect large numbers of people at the same time. This includes acts of war, natural disasters, alien invasions and more. That doesn’t mean you can’t claim, but what you can claim for might change. So your travel insurance might get you home if there’s a tornado, but won’t necessarily pay out if you want to get a refund on a holiday after a tornado caused damage.
Non-disclosure
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When you take out insurance, you’ll be asked to ‘disclose’ all relevant information that the insurer needs to determine if they can offer you a policy and how much of a risk you are (and what you therefore pay). They have to ask you clear questions though, so you know exactly what to tell them.
Of course, it’s easy to forget things, or not realise that something is important. This most often causes problems with health issues, but non-disclosure can also be applied to the condition of what you're insuring, previous claims and other factors too.
What to do: Loads of claims rejected due to non-disclosure get overturned on appeal. If you made a genuine mistake due to unclear or ambiguous questions, or if the reason for rejecting your claim isn’t fair, you can complain.
Policy limits
All insurance policies have limits and excess fees. The first is the maximum amount a policy will pay out, the second relates to the amount of money you have to pay towards any claim. So if your travel insurance covers you for possessions up to a policy limit of £5,000, but the excess is £500, the maximum you can get is £4,500. But you’ll also need to prove that you owned the items and explain what happened to them too in order for your claim to succeed.
What to do: Policy limits should be highlighted clearly in a ‘key facts’ document. If this wasn’t made clear, or the contract was confusing, appeal.
Wear and tear
A perennial complaint this one. A chunk of your roof falls off in a storm, so you claim on your home insurance policy. The insurer sends out a loss adjuster and says that the roof was poorly maintained and as a result rejects your claim due to ‘natural wear and tear’.
What to do: Wear and tear is highly subjective. Just because the insurance experts say it’s your fault doesn’t make it right. Gather evidence of the situation before the damage and make a complaint.
Time limits
‘Non-claimable periods’ or ‘initial exclusion periods’ are timescales during which you can’t make a claim. This is partly to stop people trying it on by not disclosing the thing they want to claim for, and taking out a policy to cover it. But they also ensure that high value claims aren’t made too quickly.
These timescales vary significantly. So many policies will allow you to make a claim if something occurs shortly after you’ve signed the contract, whereas policies like unemployment cover might have an exclusion period of up to 120 days since the start of the policy.
However, there are also timescales for making a claim. These could be as little as 24 hours if your phone gets nicked. Holiday claims can also have tight deadlines for registering your claim, while other types of policy could give you a longer period. If in doubt, report as soon as possible. Save the claims number for your insurance company in your phone.
What to do: Claim deadlines are ‘key facts’ – so if you weren’t warned, make a claim.
Allegations of shenanigans / Reckless behaviour
I’m wording this euphemistically, but you know what I mean! Many an insurance claim has been rejected after allegations of getting drunk and messy, or driving carelessly, or not following security requirements.
Proof is what matters here. The business can’t accuse you of getting hammered without evidence and should look at official crime reports if you’ve been robbed before claiming you left a window open or didn’t put the alarm on.
What to do: Don’t get mad, get even. Remember the burden of proof is on the insurer, so take it further if your good name has been tarnished.
How to make a complaint
Taking this further with insurance problems is unlike complaints about other sectors, in that it feels like you’re making two complaints. First you have to make a claim, then if that gets turned down or you’re not happy, you need to make a complaint about the claim. However, you can make a complaint about how a claim is going at any point in the process too.
The process is dead easy. I’d put your complaint in writing but keep it simple. Set out:
- What happened that led to the claim
- Why you don’t think that the insurer has been fair
- What you understood about the agreement
- What you’d like to resolve the complaint
The insurer has a maximum of 8 weeks to sort out the complaint. It must send you its ‘final decision’ within that timeframe. If you’re still not happy, or you haven’t had a response in that timescale, you can go to the free Financial Ombudsman Service (FOS).
The Ombudsman is a free and impartial alternative to the courts. Over the last two decades I’ve seen countless insurance claims overturned due to unfair T&Cs, officious insurance companies and unfair decisions. So it really is worthwhile taking things further.
- Martyn James is a leading consumer rights campaigner, TV and radio broadcaster and journalist
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