Why are insurance claims being rejected?Members frustrated by rejected insurance claims

14 July 2013

Finance-complaints1

Research from Which? has found that over one in 10 home insurance customers and one in 20 car insurance customers who made an insurance claim in the past two years had it fully or partially rejected.

Which? surveyed 4,800 members with home and car insurance about their experiences when making an insurance claim, as well as looking at policy documents from 10 car insurers and 10 home insurers commonly used by Which? members to see where customers were likely to face issues. 

Although most members were satisfied with how their claim was managed, a minority were not. 

Know your rights: What to do if you're unhappy with an insurer's decision on a claim and how to write a complaint letter to your insurer.

Common reasons for insurance rejections

All of the home insurance policies Which? analysed include a requirement for the property to be kept in good condition, but none of the insurers went into detail about what this meant. One member told us that their insurer had refused a claim because they had not re-grouted their bathroom tiles every year.

Some members complained that their claims for storm damage was turned down because the wind-speed was not high enough on the night the damage occured.

Lost or damaged items

If you want to replace a lost, stolen or damaged item you normally need to provide proof of ownership in order to prevent fraud. But some insurers take this to the extreme, for example one member told us their insurer would not pay for jewellery purchased several decades ago and others for freezer contents without a receipt.

Seven of the home insurers say you must report any accidental loss to the police or you won’t be covered. The other three won't cover you for accidental loss outside the home if you haven't reported the items to the police. 

Car insurance claims

We saw many cases where car insurers have settled claims 50/50 even where the driver believes they have strong evidence that a car accident was not their fault, meaning they will have to pay an excess and may lose their no-claims bonus.

Some members were also dissatisfied with the valuations they were given by their insurer for a written-off vehicle. They felt the values were too low and not enough to purchase a comparable replacement. 

FCA to review insurance market

Which? executive director, Richard Lloyd, said: 'We found examples of home insurance claims being rejected for some spurious reasons, and consumers unhappy with way their claim was handled. While most claims are accepted and paid out in full, a minority are not, and if your claim is rejected it could prove costly.  

'As part of their review, the Financial Conduct Authority should look closely at home and car insurance to make sure insurers are not relying on exclusions buried in the small print to reject legitimate claims. If you're unhappy with your settlement you should complain to the Financial Ombudsman.'

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