/ Money

Have you been unfairly denied an insurance claim?

Sick teddy bear in bed

Insurance law is unfair, it’s confusing and works against consumers. Claims are often unfairly refused just because the insurer says you didn’t tell them something important – even if they failed to ask you beforehand.

If you’ve bought travel insurance with critical illness cover and come a cropper holiday, you’d expect to get a payout. That’s the only reason you pay the premium. But often that’s not the case.

If you have a heart condition, but don’t mention your high blood pressure, then the insurer is right to dismiss your claim as these two conditions can be linked.

But how about if you’re in good health, then succumb to a serious illness, such as leukaemia? The insurer will then hit you with a bunch of questions and if it discovers you had an ear infection some time back, they could refuse to pay up.

This is surely wrong, but under the current law they can defend their decision (although you can complain, and take the matter to the Financial Ombudsman Service). But as absurd as my previous example sounds, it’s actually based on a real case.

Time for a change in insurance law

As for how they can justify refusing cases such as the one above, well, you can partly blame the Edwardians for that. More than 100 years ago the Marine Insurance Act was drawn up. This law was designed to make it easier for two expert parties, such as insurers, to conduct business in a sensible manner.

One important element of the Act covered disclosure of pertinent facts, or rather non-disclosure. But the Act wasn’t intended for a member of the public to grapple with buying travel insurance and knowing what part of their medical history was relevant to disclose.

Now, you’d expect experts to be able to distinguish between what’s essential to disclose and what isn’t, but the average person is less likely to spot the difference. That’s why we have ‘experts’, be they doctors, lawyers or insurers.

Surely, in the case of insurance, you’d assume the provider would have to ask the right questions up-front rather than wait until a claim is lodged?

Which? is calling for a review of insurance law, so that the onus of responsibility is not on consumers but on insurers. That seems to make sense for our rights, but does your experience of claiming on insurance back our campaign?

Keith Staiger says:
25 October 2010

I always endorse proposal-forms with ‘ I cannot possibly know everything that you, an insurer, might regard as relevant to your acceptance of this risk. I have revealed everything that I , a layman, consider relevant and am always willing to answer specific questions’. Perhaps someone will tell me the legal status of this, and whether it makes a blind bit of difference.

Thomas Draper says:
26 October 2010

we booked a holiday in october 2009 to be taken in september 2010, at the time of booking we declared every item of medication that i was taking. in june 2010 i had a slight stroke, had to cancel the holiday, and tried to claim our deposit back, they refused to pay, claiming that we had not disclosed everything, namely raised cholesterol, which we didn’t know about until after the stroke, so, how could we declare it? we are still waiting to get our deposit back. if which wants comment from members we would be happy to take part.

John Renshaw says:
26 October 2010

We recently had a new patio laid. When the old one was taken up there was a void under the drain which had obviously been leaking for sometime due to the amount of soil that had been washed away. The insurance company claimed this was accidental damage which I was not covered for, How could it accidenttal when the drain was 2 feet below ground and covered in concrete?

When renewing my motor insurance with the RAC an aside about my son’s accident in my wife’s car led to an instant dip into my bank account asI had not notified them of this claim and as my wife was a named driver on my policy they had to amend my policy.My son has never driven my car nor would he. How can a driver’s accident reflect on the policy of a vehicle he would never drive.He doesnt live at home.His use of my wife’s car was a one off.My wife has never driven my car although she is on the policy just in case.I refused to renew the policy nor will my wife when hers expires.Their booklet says they should be told about complete inormation about the car and insured drivers and any incident which may involve us as insurers.I did tell them when I arranged my wife’s insurance!I have ewritten to them and will contact Ombudsman if I get nowhere.It only cost me £20 but had I mad a claim they would have rejected it -a waste of £300 premium.

Kay Timpson says:
1 November 2010

Following a burglary in July my parents made a claim to their insurance company and an assessor visited their home. He was delighted to find a crack in the garage wall and even asked my parents for batteries for his camera! They had a joint building and contents policy. The assessor took no details of the theft. Some weeks later they received a letter stating that subsidence existed at the property and that they were voiding the policy completely and would not be processing the burglay claim. The assessor openly admitted during his visit to having no expertise or qualifications in this area but despite my parents protests that subsidence does not exist the insurance company has taken his word. They find themselves now in the difficult postition of having no insurance, no reinbursment for the burglary and increased insurance quotes from other companies with no subsidence cover included – the condition of the garage wall bears no relevance to the burglary. The action of the insurance company seems totally unfair.

Surely your parents should appeal to the insurance bureau, (I cannot remember its exact name), complaining that the so called assessor was not a structural engineer and about the way that they matter was handled. It might be necessary to obtain a report from a REAL structural engineer in order to further the case. Can one slander or libel a building? Launching a false allegation about a building or for that matter your parents could be construed as a assault on their integrity and possibly actionable in law.
On a second point, why are none of the charlatans named? Which? does name superior products and organisations after testing, perhaps a hit list of ‘do not use hucksters’ would be a good development.

Carol Hall says:
5 November 2010

House Insurance,
I had a leak in my bathroom that went down into the dining room. This cost me over £3k to get sorted. Not a problem you think!!!
When the loss adjuster was here he was shown the warped and damaged bath panel – this was in the garage and so was my husbands embroidery machine.
Yes you guessed it we were turned down because we did not disclose the business, however this was not the case as I had asked if they could cover the machine and they said not under the house policy. It is my word against theirs!!
What happened next… went to another insurer and told them that my husband was self employed and worked from home…… guess what – that also has not shown up on the policy document so if I need to claim….. SORRY YOU DIDN’T DISCLOSE.
There is no way to sort it as it is always your word against theirs!!

David Griffiths says:
2 December 2010

I totally support any campaign Which? mounts against this pernicious practice of “insurers”. I took a lone ‘pop’ at it some 30 years ago by asking my insurer (well known then and apparently reputable, but now long since ‘merged’) what they considered a ‘relevant fact to declare’ when renewing my policy, against which I had made no claim. They replied, in effect, ‘whatever we might consider relevant if a claim is made’. When I pressed upon them the observation that, as they must, surely, already have a list of such factors which they would consider justifying an increased premium if mentioned when taking out the policy, why could this list not be made available to policyholders, so that no dispute could arise later, to which they could only lamely reply to the effect that ‘it was standard industry practice’.

I urge Which? to launch a vigorous campaign to get this scandalous practice stopped.

I was not too sure if my use of ‘pernicious’ in the opening line was appropriate but my Mac dictionary shows that its origins make it much more appropriate than I realised :

Origin late Middle English : from Latin perniciosus ‘destructive’, from pernicies ‘ruin’, based on nex, nec- ‘death’.

I support the retention of this bit of law – it keeps fraudulent claims down so that we honest customers don’t have to pay more. The issues highlighted in the other posts show how weak product analysis is by customers and by Which? – instead of telling us which kettle to buy (cost £30) Which? should be exposing disingenuous dealing by these useless insurers (cost £ thousands). Changing this bit of law would be solving the wrong problem and would increase costs substantially.
Which could usefully develop some simple rules of thumb to help us buy insurance that is appropriate
e.g. never buy an extended warranty (insurance) at point of sale if it costs more than 5% of the purchase price
e.g. always opt for the highest excess that you can afford to cover yourself – better still, don’t buy insurance when you can afford to self-insure (e.g. for mobile phones)
e.g. never buy accidental damage cover for house contents because there is so much scope for fraudulent claims by others that you can never pay a fair price (unless you too claim fraudulently)

Finally, Which? should encourage us all to take responsibility for our own property and belongings. Which? has a duty to work towards the society our children & grandchildren will inherit and I for one don’t want them to inherit an “it’s not my fault” culture.

Lisa says:
17 July 2011

We purchased a house with a one level extension built in the 70’s the floor sloped from history movement (according to a structral report) but this movement began again 2 years ago and we now have cracks you can see daylight though on the walls where it joins the house from ceiling to floor I have call our insurers out twice the first time they advised resitching the brickwork where the extension meets the house and releveling the floor I tried for months to get a quote for this but no bulider would touch it as they all thought it was subsidence so I called insurers again and they advise same again what do i do am in catch 22

Home insurance fire claim has been refused me by my insurer because I fail to inform them about changes to my policy. I secured a job outside london and need accommodation near place of work. As a result I let out the house in London. And because of a recent fire incident in the property, the insurance company have cancelled the policy and have treated it as void from inception. The claim they are unable to deal with my claim, and will arrange for all preminium paid by me from the date of inception are returned to me. What do you suggest I do? Where can I go for help, I will cost big money to repair damages caued by the fire.