Hear the story about the woman who made a claim under her critical illness policy after being diagnosed with leukaemia? The insurer rejected the claim, as she didn’t disclose that she’d suffered from an ear infection.
Or the one about the man who made a claim under his critical illness policy after suffering from a heart attack? The insurer refused to pay up because he had failed to disclose unconnected problems with his back and neck when he applied for the insurance.
If you’re as astounded as me that this sort of thing can happen to people at their most vulnerable, let alone at all, you may be somewhat comforted to hear that things are about to change.
Insurance law is archaic and unfair
Currently, consumer insurance law is seriously outdated. Made up of various commercial cases dating back to the 18th century, it was designed to govern face-to-face insurance deals in the coffee houses of Georgian London.
It was never intended to cover today’s consumers. The result of this has been numerous cases, like those above, whereby people in need don’t receive payouts because they haven’t disclosed information that they had thought was irrelevant.
And it’s not just medical and life insurance that’s affected. If you’ve been burgled, but didn’t tell your home contents insurer that your house suffers from subsidence, they could refuse to payout even though the two are in no way connected.
Insurance law reform
However, there’s light at the end of the tunnel. Along with other consumer groups and insurance experts who have long campaigned on this issue, we’re celebrating the news that insurance law is at last going to be reformed.
Last week, the House of Lords introduced the Consumer Insurance (Disclosure and Representations) Bill, which is expected to be passed without objection. The onus will now be on insurance companies to ask consumers the right questions before they sell a policy. You’ll just have to make sure that you take reasonable care not to mistakes, though a payout will be refused if you’ve been found to have lied.
It may still be a couple of years until this comes into force, but at least from then on insurers will need to ask the right questions, the law will be fairer, and consumers will be much clearer about what is expected from them when they buy insurance.
Have you ever been refused an insurance payout because you didn’t disclose something you had thought was irrelevant? And do you generally find insurance forms confusing and unclear?