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17 Feb 2018

Five reasons insurers deny claims that could catch you out

Does the small print in your policy invalidate your claim?

Generally speaking, more insurance claims are paid out than aren't. Yet substantial numbers of customers find themselves tussling with firms over the small print in their policies.

We trawled through our archive of Which? member experiences, and poured over dubious decisions on claims that the Financial Ombudsman Service (FOS) later overturned.

Here are five common clauses insurers rely on to wriggle out of paying claims.

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1. Your application was inaccurate

Not disclosing the use of your car

Any inaccurate information provided when you apply for insurance can potentially invalidate your policy.

One customer with car insurer Horizon had his claim rejected after an accident while driving home from work. When buying the policy, he'd mistakenly failed to state that he planned to use the car for commuting.

Ironically, his premium would have been £16 lower had he disclosed this. Fortunately, the FOS took his side, and Horizon ultimately paid out.

Pre-existing conditions

With policies that take your medical history into account, failure to declare a pre-existing condition can sow the seeds of later claims disputes.

Working out what to disclose about your medical history isn't always straightforward, though.

When we asked Which? members about their experiences of rejected claims, one reported an incident where they had to cancel a holiday on the day of departure due to illness.

Their travel insurer declined the claim when it discovered the patient's medical history reported a previous case of labrynthitis. To the member, this had amounted to a brief spell of dizziness some months previously - quickly dispelled the day after consulting his doctor.

2. Your claim falls into the wrong category

Business use

'Business use' is a common exclusion in home insurance policies - but whether a lost or stolen item was used for business or personal purposes can be a semantic sticking point.

In 2015, Allianz disputed with a policyholder over which stolen items - including a briefcase, laser pointer, portable speaker, iPad and iPhone - wereused primarily for business and therefore not covered.

Wear and tear

'Wear and tear' or 'gradual damage' is another blanket exclusion for many policies, though applying the label can be contentious.

In 2015, Admiral attempted to decline a car insurance claim for a driver's air-conditioning system - even though the claim was made after an accident. The insurer speculated, but ultimately couldn't prove, that the damage was caused by wear and tear.

3. Your claim doesn't meet the criteria

Windy enough?

If gale force winds knock tiles from your roof, you may assume the 'storm damage' cover in your buildings insurance kicks in.

However, when we looked at the policy documents of the five largest home insurers, three (Aviva, Axaand Lloyds) make it clear that they'll look for evidence of windspeeds of 55mph or higher.

Complaints to the FOS about UK Insurance (which underwrites Direct Line) suggests it uses the same criterion. Currently, 55mph corresponds to the classification of 'storm' on the Beaufort Scale - sitting higher than 'gale' or 'strong gale'.

Ill enough?

Proving the severity of health conditions can be a particular cause of grievance between insurers and customers, particularly in policies designed to compensate you for time off work.

But it's not just humans getting caught out. We examined the T&Cs of five pet insurersoffering 'holiday cancellation cover' that repays expenses for cancelling a holiday because of a sudden medical crisis affecting your pet.

In each case, the small print reveals that your pet needs to have 'life-saving' treatment for the cover to apply.

4. You haven't kept your belongings safe

Most policies come with a 'duty of care' or 'reasonable care' clause requiring you to take practical precautions to prevent claims arising.

In theory this is fair, but in practice it can lead to insurers contesting claims for dubious reasons.

In March last year, insurer HCC rejected a travel insurance claim for theft of u20ac580 cash from the policyholder's swimbag, even though the policyholder had kept the bag beside him while sunbathing on a beach. As he was unable to detail how the theft had occurred, the insurer concluded he hadn't been reasonably attending it.

5. You haven't followed the claims process

Insurers are sticklers for procedure, and so claims could potentially be jeopardised if you haven't diligently followed their processes. There can be good reasons for this, but some cases are more dubious.

A Which? member was faced with au20ac6,000 hospital bill after treatment for an injury in La Gomera. The underwriter of her travel insurance, Mapfre, declined to pay.

Mapfre stated that their instructions hadn't been followed. It wanted the member to travel home in the company of a nurse, but she and her partner had instead returned by themselves with the permission of her surgeon.

Fortunately, after she complained, Mapfre budged and settled the claim in full.

5 tips for making a successful claim

1. Pay attention when buying cover

Be accurate and thorough when applying, and if you later spot an error in your documents, contact the insurer to rectify it.

2. Keep your insurer up to speed

Insurers generally want to know about changes in your circumstances. If something happens that affects the accuracy of the information they have about you, update them as soon as you can.

3. Follow the claims procedure

If you need to claim, contact the insurer as soon as possible for advice, and follow their instructions closely. If any steps of their process prove impractical, make sure you report any difficulties back to the insurance company.

4. Don't be afraid to challenge a decision

If you disagree with, or don't understand, an insurer's decision, ask it to clarify. If they won't honour a claim because of non-disclosure, check how straightforward its instructions were. It's not a one-way street; the insurer has a duty to be clear about what it requires.

5. The insurer's word isn't final

If an insurer rejects your claim, you don't have to accept its rationale. Send a written complaint and if it isn't resolved to your satisfaction, escalate it to the FOS