Has your insurer refused to pay out?

There were some quite shocking examples of insurers not paying out on Watchdog last night. Whether it’s critical illness or home insurance, there seem to be plenty of people having a tough time with their insurers.

Our own research has uncovered a whole host of problems plaguing the insurance industry. When we examined insurance policy T&Cs we found they were far too complex and far too long, with some running up to 60 pages. And some didn’t highlight the important points upfront.

Although it can be impractical, we always advise that people read the small print so you won’t get caught out. But we want to see small print written in plain English, with key policy conditions clearly summarised.

We can’t get no satisfaction

The Financial Ombudsman has seen a steep rise in the number of complaints in the past year, many of which are being upheld in favour of the customers. This shows insurers are fighting more legitimate claims, and aren’t paying out when they should. We fully expect insurers to pay out reasonable claims, rather than relying on technicalities buried in the small print to avoid paying out.

In April, we undertook a large survey of insurance claims satisfaction, and found a large gap between the best and worst insurers. Some insurers pay out promptly, while others tend to drag their feet or reject claims altogether, leaving policyholders frustrated.

One person told us that, while claiming, they had been made to feel like a criminal instead of a victim of a theft. Companies that demonstrated a degree of trust in claimants were clearly appreciated in our survey.

Insurers stuck in the past

We’ve also found that many insurers are failing to move with the times when it comes to their cover. Our investigation found that a range of travel insurers are providing inadequate cover for lost or stolen valuables abroad, such as smartphones, tablets and laptops.

Inadequate cover could leave holidaymakers hundreds of pounds out of pocket. A number of policies had a single item limit of just £200 – less than half the cost of an iPhone. Travel insurers advise that customers could look to their home insurance instead – but we don’t think this is good enough. Insurers should raise the outdated limits for everyday items like smartphones and laptops or, at the very least, always clearly offer the option of cover at a higher premium.

The Financial Conduct Authority has acknowledged the problems within the insurance industry, and announced a review of the UK market in May 2013.

Do you think insurance companies are doing a decent job in difficult times? Or do inadequate policies, confusing small print and increasing complaints cause you to question insurers’ trustworthiness?