Before you take out an insurance policy, it’s essential you know exactly what is covered – and more importantly, what isn’t
Insurance is an essential part of life and most of us will have at least two insurance policies.
But insurance comes in many shapes and sizes and policies can vary wildly. Before you take out an insurance policy, it’s essential to go through the “key facts” document.
This is usually available on request and comes in pdf form or through a link. The key facts document will tell you all the essential things you need to know, so you don’t have to trawl through the entire contract before making a decision.
This will include things like:
- Excess fees: the amount of money that you have to pay when you make an insurance claim, except it’s usually deducted from your claim settlement figure.
- Policy limits: the maximum amount your insurance policy will pay out when you claim for specific situations and losses.
- Exclusions: things that aren’t covered by the policy.
- Disclosure: things you have to tell the insurance company about to be fully covered.
These facts can help you make a fully informed decision about whether the policy is right for your needs. A few things to bear in mind though.
- If the insurer refuses to tell you about the key facts in advance, ask yourself: is this the policy for me?
- You have a 14 day statutory cooling off period when you take out a general insurance policy. So make sure you click on the links to the terms and conditions and get familiar with what you are covered for and how to make a claim. Ask if there’s an admin fee for cancelling though.
- Can’t face reading the whole T&Cs? I don’t blame you. On Rip Off Britain, we realised that some T&Cs took hours to read out loud, and though some of the worst offenders have reduced, many policies spill over 50 pages! So why not use some of the free AI services to summarise key parts of the policy for you? Make sure you check that the summary is accurate though – AI isn’t nearly as perfect as some people would have to believe.
The big causes of insurance claim rejections
Most insurance claims will be paid without too much hassle. But on many occasions, businesses can make decisions that don’t seem fair at all. Here’s my guide to the main reasons for rejected claims – and how to tackle them.
Terms and conditions
Insurance terms and conditions adapt and change over time. So just because you took out a policy ten years ago, it doesn’t mean your current policy is anything like the same if you look at the details.
Often when incidents occur that lead to lots of claims, new clauses are added to contracts. So when an unpronounceable volcano in Iceland erupted over a decade ago and grounded flights, insurers begrudgingly paid out… then put volcano clauses in to their contracts excluding some claims!
But here’s the one key fact you need to remember. Just because it’s in the T&C’s doesn’t mean the clause is fair.
Often terms and conditions in insurance documents are far too broad and open to interpretation. Others can be ambiguous and it’s hard to know how they would apply to a claim.
You may also find “key” exclusions have been buried deep in the main T&Cs. Finally, just because it’s in the contract doesn’t mean that it’s fair for an insurer to reject your claim in full or in part.
Insurance policies must meet the same conditions set by the regulator (the Financial Conduct Authority) as all other financial contracts.
There are loads of rules covering insurance contracts, along with the wider “Treating Customers Fairly” regulations. Basically, if it doesn’t feel fair to you, then the Financial Ombudsman Service can tell them to uphold your claim.
War, disaster and catastrophe
As we have seen from the current situation in the Middle East, wars and conflicts aren’t covered by many insurance contracts.
But it’s not just war. Catastrophic events are generally not covered by insurance. This can include things like:
- War
- Terrorism
- Hostile acts
- Tornados
- Floods
- Volcanos
- Earthquakes
- “Acts of God”
This may seem unfair, as insurance is supposed to cover those unexpected events that happen in life. But as a (very) general rule, incidents that are completely out of the insurer’s control – and – could not have been anticipated, are generally excluded.
However, when these major events occur, both the UK government and the authorities in the country you may be visiting will come up with a plan to make sure you are safe.
So if you are on holiday you may be repatriated on special flights as soon as it’s safe to take off. If you are stuck at home after a major storm, the local authority and government should have a disaster management plan for the immediate aftermath of the event.
Wear and tear
Nothing lasts forever. So over time, things we own will wear out and pack in. One of the major disputes with insurance relates to whether items you are claiming for have simply reached the end of their natural timespan or have been damaged over a ‘claimable event’.
From the tiles on your roof to the engine in your car, wear and tear is an incredibly contentious area of insurance because it’s subjective.
There’s no real legal definition of what wear and tear involves but you might find a bit of clarity in your insurance contract when you look at the terms and conditions in detail. For example, you may find that specific maintenance requirements for things like your roof or external fences are spelled out.
As a general rule, insurers define wear and tear as “natural damage that occurs to contents or your property structure over time”.
This means that if they believe you should have carried out repairs – and the damage you have claimed for is as a result of failing to do this – they can turn down the claim.
However, unclear contract terms or unspecified definitions of wear and tear mean you can’t be expected to have understood what the insurer requires, unless you really have ignored a pretty obvious existing bit of damage.
You can rely on things like photographs of your property and invoices for work you’ve had done to dispute a claim rejected for wear and tear.
A lot of these claims arise after storm damage, which means you can turn to weather data to prove that the storm was sufficiently strong to have led to the problem.
Sickness and heath
Insurance policies require you to disclose information about your health. Leaving aside the obvious ones, many a travel insurance claim has been declined over disputes about pre-existing health conditions.
Alarmingly, some policies exclude what they consider to be “excessive” alcohol use or depression. The law around disclosure was tightened a decade ago to make both you and the insurer equally responsible, should problems arise.
You must tell the insurer about any significant health conditions you have had over the last few years. This is because having these conditions could affect how much you pay for the policy – or if you are offered a contract at all.
But by that same token, the insurer must also ask you clear questions so you know precisely what you have to disclose.
When it comes to what you must disclose, you need to tell the insurer:
- If you’ve had a serious condition, even if it’s in remission.
- If you have an ongoing condition that you are receiving treatment for.
- If you’re waiting for an operation or have had one over the last few years.
- If you’re waiting for test results, from blood tests to x-rays or are being tested for something.
However, some insurers have been known to “fish” through your medical files when you make a claim to see if they can find anything you haven’t disclosed as a way to reject a claim. This is not allowed and the regulator takes a dim view of such behaviour.
Some insurers ask you to disclose every trip to the doctors you’ve had over the last year or two. others, just the occasions where you had treatment or tests. Remember that the insurer must ask you all relevant questions, so if they’ve been vague or unclear, you can complain.
Personal belongings
Personal belongings are covered by your home and travel insurance policies… up to a certain limit. But over the last decade, the value of the items we carry around with us has increased dramatically.
Take travel insurance. Policies vary considerably, but you will find many contracts cover you for personal belongings up to a value of £1,000 to £1,500.
Now have a look through your travel bag. New phone: £1,300. Tablet computer: £1,000. Handheld gaming console: £300. Smart watch: £400. That’s £3,000 alone.
On top of that, there’ll be a limit to the amount of holiday cash you can claim for too. In addition, exclusions apply, so if you leave your suitcase with reception when you check out, you may invalidate your insurance if the bag gets nicked or things are stolen from it!
Personal belongings may sometimes be covered by your home insurance, but there are caveats. The cover is likely to end as soon as you stray beyond the boundaries of your home.
You’ll also find lots of accidents aren’t covered. This includes damage caused by spillages, slips, rampaging children and pets, careless behaviour and DIY disasters. You can beef up your accidental damage cover but it’s not going to make every incident payable under your policy.
Oh and if you leave personal items in your car – even if they are locked away or not visible – you may find yourself disappointed when you claim for theft or damage.
Taking things further
The Financial Ombudsman Service (FOS) is a free alternative to the courts. The ombudsman deals with thousands of insurance-related complaints every year – the majority of them relating to claims.
The ombudsman takes a pragmatic view on insurance claim problems. In most cases, there’s usually a term or condition in the contract that backs up an insurer’s decision to reject or part-pay a claim.
However, it takes the view that just because something is in a contract, it doesn’t make it “fair or reasonable”. So when considering your claim, the ombudsman might decide that a clause in a contract is unfair, or vague and too broad or open to interpretation.
They may also conclude that the reasons for rejecting a claim aren’t fairly considering all the facts in the case either.
Ombudsman services have a remit to consider how businesses are behaving when they look at complaints, which means they have more consumer-focused rules than going to court, where a judge has to consider the letter of the law.
So if you are unhappy with how a business has considered your claim, take it to the ombudsman.
- Martyn James is a leading consumer rights campaigner, TV and radio presenter and journalist
