The ABI recently released revealing statistics on why insurance claims are denied. Specifically, they reveal a lot of different factors that affect claims for different types of insurance policies.
According to the ABI, one in five home insurance claims is turned down and 23% of travel claims are denied. However, 79% of home insurance claims and 99% of car insurance claims are paid out.
Payout data covering the most common insurance claims for the period 2013 – 2014 show the average private motor insurance payout came to £2,160. The average payout for home insurance was £2,520, and the average for travel insurance claims was £884.
Studying claims denied and approved
This is the first time that this type of statistical breakdown of insurance claims and payouts has been made public. The reason is to help consumers understand what their insurance policies cover, and why claims are denied.
The analysis covered 6.9 million claims handled by 19 insurance companies. It underlined the industry’s desire to build trust and assure customers of its commitment to their needs. ABI director Huw Evans, iterated that trust is earned, and that transparency about the insurance payout process is crucial, especially in cases where claims are rejected.
The insurance industry wants to inform customers of the insurance policies they need, and to explain policy details. It’s imperative consumers buy the correct policies and understand their levels of cover.
Why are claims denied?
In the case of homeowner’s insurance some common reasons for claims denied include:
- Normal wear and tear
- Damage resulting from natural wear and tear and poor maintenance
- Claims that are less than the excess of the policy
- Claims for the wrong type of cover. For example, accidental damage is an optional extra bought to ensure comprehensive coverage
A common reason for travel claims being denied is a lack of evidence. So wherever possible keep your receipts and invoices.
Another common reason for denial of claims is failure to disclose all the relevant information about your health. Customers must inform the insurance company of any pre-existing medical conditions. Customers who put all their cards on the table are are more likely to have their claims approved.
Don’t forget about due care – as in you need to take due care when travelling with your valuables. So don’t do anything silly like leave your valuables (for example, your diamond ring, iPad, or smartphone) on your car seat when you pop into the store. If you’re careless and jewellery, clothes or money is stolen, you won’t be covered under the terms of your policy.
What if you feel wronged?
If you feel your claim is wrongfully declined, double-check your policy documents for clarification. If you still feel that your claim has been unfairly dismissed, then you have the following options:
Get in touch with your insurance provider: Either phone or email to find out what the proper complaints procedure is. In some cases you may need to submit a formal letter of complaint. Money Advice Service has a template for you to use if you’re not sure how to write a formal complaint. In some cases you may have to back up your complaint with an independent assessment to prove that you weren’t negligent or that the damage wasn’t a result of wear and tear.
When all else fails and you still believe in your claim’s validity, you can take your complaint to the Financial Ombudsman Service. This really is the last resort, however, and you can only lodge your complaint once you’ve received a ‘final response’ from your insurer or if you’ve been waiting 8 weeks or longer for your insurer to respond.
Money Advice Service also outlines how to go about filing a complaint with the ombudsman.