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Has your insurer refused to pay out?

Toy house on coins

Most of us have numerous insurance policies. But how many of us trust insurers to work in our best interests? Last night BBC Watchdog put the spotlight on insurers…

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?


Suspect they have a procedure where only allowed to claim once so if want second opinion the GPS, who are allowing corporate direction to ignore do not give OK . Consequently I had a heart attack dying 3x at time, & weekly visits recorded as mental with them later refusing to remove. When they elect not to take the hippocratic oath something is very wrong. And when Ombudsmen [ call centres] comply oh dear .

This is not just a problem with the insured. Insurers will frequently try to bully 3rd party motor accident victims to accept significant compensation discount’s on the basis that there was contributory negligence, even when there is no evidence of contributory negligence.

Insurance companies behave this way because any insurance claims will be contested in a civil court where there is no legal aid assistance for the litigant. If you want to fight with your insurance company you bear the costs for your lawyer. That’s expensive, especially if there is no guarantee of success and you face the risk if meeting your own legal costs as well as that of the insurer. Insurance companies take advantage of the fact that many policy holders are reluctant to take the risk of litigation.

Insurance is a cut throat business. If for example you were to audit insurers books you will find that they have not made a profit from car insurance in the last decade. There is no such thing as cheap car insurance. If you pay less for yours then the reason is almost certainly to be found in the policy terms and conditions, and you will only find out the shortcomings of your cover when you make a claim.

If there is any defense for insurers its to be found in insurance fraud, and this happens at all levels, from organised fraud, to the opportunistic over claiming by policy holders. Unethical behavior is not restricted to insurers. There are many people who don’t see insurance fraud for the theft that it is and willingly indulge if the opportunity arises.

bob says:
8 June 2013

Top tips for avoiding stress caused by insurance companies.
* Only buy insurance for the worst risks (house burning down, foreign health cover). Too often, it’s sold unnecessarily for small risks that you can self-insure.
* If you do buy insurance, watch out for being conned into buying little extras.
* Choose a high excess (the amount you’ll self-insure) to reduce premiums. You can’t claim for small losses, but you won’t have to contact the insurer or fill in forms.
* Self-insure: put money into a savings account each year that you can use if you lose something.