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Why an insurer might not pay your home insurance claim?
Posted by | Posted in Accomodation, Architecture, Publications, Real Estate | Posted on 21-03-2012
It’s fair to say that premiums rise every year because companies that offer home or household insurance are trying to keep up with the ever-increasing cost of claims and continue to make a profit. You might think, therefore, that insurance companies would also try to minimise their pay-outs and maximise their profits by rejecting as many claims as possible.
Actually, that’s not the case. Insurance companies estimate how many claims they are likely to receive in a given year, based on previous years’ claims, and calculate the premiums on that basis – they are assuming that they will be paying out claims rather than rejecting them and will still be making a profit. There are so many insurance companies out there that it’s really a buyer’s market – and a company that gets a reputation as a poor payer won’t get much repeat business from existing customers, or new customers through word-of-mouth.
However, there will be occasions when an insurance company won’t pay out for a claim against buildings or content insurance policies. Every insurance company has standard terms and conditions and these are really worth reading before you take out a policy. For example, a company might routinely exclude any claims due to flooding – not ideal if you live on the bank of a river. If your claim falls under a standard exclusion clause the company won’t pay out. Similarly, if you have omitted some information or answered one of their questions incorrectly when applying for the policy, when you submit a claim the company might well discover that you haven’t given them all the facts and might refuse to pay out for that reason. For example, if you’ve said you have mortis locks on all your doors and windows and burglars break in through the tiny window at the side of your house which has no lock, the insurers could refuse to pay out.
Some insurers will refuse to pay if any information was incorrect whilst others will only refuse to settle a claim if the faulty or missing information is pertinent or relevant to the claim. So if you didn’t mention the small window without the lock, some companies won’t pay out even if the claim is for a broken roof, whilst others would pay out as the lock wasn’t a factor in the damage being caused. Check your policy for details of the cover provided. If your contents insurance limit is £50,000 and your contents are actually worth £100,000, a claim for a broken shower unit that is worth £800 might only receive a pay-out of £400 to repair or replace it.
If you’re not happy with a decision made by your insurance provider about a claim, you’d need to go through their complaints procedure first, and if you’re still not happy then you can complain to the Financial Ombudsman Service, which firstly looks at the bare facts and suggests a compromise solution and then, if either party is unhappy, investigates further and provides recommendations. If that doesn’t resolve it, the Ombudsman makes a final decision.
