I work for an insurance intermediary – the full difference between an intermediary and a broker is pretty negligible – so I sell and manage home insurance policies. I don’t handle claims in any manner whatsoever. I do, however, get plenty of calls from (often irate) customers who wish to complain that their claim has been rejected. Whilst there’s little difference between an intermediary and a broker, there’s a world of difference between an intermediary/broker and an insurer. They expect us to deal with it. We don’t. We simply take a note of their complaint and pass it on to the insurer.
But these complaints do give me an insight into the world of home insurance claims, specifically the claims that are rejected. The general public at large generally believe an insurer will do everything they can to weasel their way out of paying a claim. I’m sure that some claims are incorrectly rejected by insurers, but the vast majority of rejections are solely the responsibility of the customer. And when I say vast, I mean at least 99% of them. Probably.
Here’s a run down of the thirteen most common claim rejections I come across. There’s no science behind my list, just my experience at the end of a phone. I’ve listed them in order of what I believe to be the most common rejections, starting with the big ones first. The top three themselves I would estimate account for 80% to 90% of rejections all by themselves. Like I say though, and despite anything I may write below, the majority of these claims comes down to the customer not insuring themselves correctly.
They have unrealistic (sometimes laughable) expectations, they fail to enter information correctly, they don’t follow the instructions, they are too lazy to research the details of their own property, they lie, they fail to read the documents and more often than not they don’t have the slightest clue of what they are doing. But perhaps most of all, they pick the very cheapest policy and then later wonder why on earth it doesn’t cover all their needs.
It’s a bit like buying a one litre Fiat and being puzzled when it fails to keep up with a Ferrari when the traffic lights go green. Everyday I speak to customers who are taking policies elsewhere to save a few pounds who are guilty of one or more of those insurance sins. You’ve not entered the £6,000 claim on the new policy? You’re going for a £50k contents policy for a 5 bed home with £20,000 of that already spoken for with some paintings/jewellery? You haven’t told the new insurer you have an ongoing claim? I should mind my own business, you know what you’re doing? Absolutely sir, you’re the boss! They are disasters waiting to happen, but bet your bottom dollar when disaster strikes, they’ll be sure to tell everyone how the ‘insurer weaseled out of paying their claim!’
Additional Accidental Damage
Policies tend to come with three potential levels of accidental damage. None, Limited and Full. How to define these? None is the easy one. The middle ground is often referred to as Accidental Damage. I’ve often thought this is a little bit sneaky, because it does lead many people to think they are covered against accidents full stop. They’re usually not. They’re covered against accidents to a specific range of incidents, usually to fixed glass, sanitary fixtures and fittings, underground pipes and cables (Buildings) and to televisions, hifi equipment and computers (Contents).
Full Accidental Damage (aka Additional Accidental Damage/Extended Accidental Damage) is the full enchilada. Brokers often give a few typical examples – spillages on carpets and sofas and sitting on your glasses. There are tons of other potential incidents that can occur, of course. Stones falling out of rings, for example. It’s also the ‘catch all’ cover – if a claim doesn’t fit under the Main Perils of the policy (fire/theft/flood etc) then the success of the claim often depends on whether or not the customer has full accidental damage. Additional accidental damage can also include accidental loss, although you should double check with your insurer to see if this is the case.
I recently took out a Contents policy on my new flat. I opted for Additional Accidental Damage. If you shop around you’ll find a policy that will cover it without costing too much extra.
Personal Belongings Away from the home
A home insurance policy generally does what it says on the tin. It insures your home, and everything in it. While it is in it. Want your stuff insured when it is away from the home? Your phones, cameras, jewellery, laptops and other assorted stuff you wear or carry with you? Then you’ll need to add that extra cover on. This makes sense, doesn’t it? I’m not confusing anyone, I hope. Yet every week I’ll speak to someone who assumed that their contents are also automatically covered when they take them out of the home. Don’t assume. Check and verify. If you haven’t bought the cover, then it won’t be covered.
Wear and Tear
Home insurance is designed to protect the policy holder against unforeseen events, such as fire, flood, burst pipes, theft, malicious damage, impact, storms and more. It’s not a maintenance policy to help keep the property ship shape. This, it seems, comes as a huge surprise to many policy holders. They’ll ask, with as much incredulity as they can muster, what on earth home insurance is for then? Well, it’s for unforeseen events, such as fire, flood etc etc. I can almost see my words going in one ear an fluttering out of the other, completely unimpeded by any solid matter in between. Often the claim is for slipped roofing tiles or leaking pipes. I’ll ask what caused the roof tiles to slip or the pipes to start leaking. Well, they’re old. Yes, exactly. If you can’t identify which of the perils listed in our documents caused your problem, then it’s unlikely to cover you.
Unspecified Specified Items
Most policies will insist that certain valuable items worth a certain amount of money be specifically listed on the policy. What counts as a valuable and what the limit is depends on the insurer – there is no standard description or amount. You’ll usually find jewellery, watches and works of art on the list though. If you have an item that you be specified and you haven’t specified it, it probably isn’t covered. Don’t assume that it is only covered up to the insurers limit if you don’t add it to the policy. In other words, if the insurers limit is £2,000 and you have a £2,050 ring, it’s not insured for just £2k. It’s probably insured for precisely £0.
Another common-ish one. If you’ve made previous claims, then it may well make your premiums a little pricier. Unless, of course, you don’t tell the insurer about the claims. Which may work fine. Until you make a claim and the insurer checks the Claims and Underwriting Exchange. You’ll not just get you claim rejected, but your policy cancelled to boot. And cancelled insurance, which you’ll have to disclose to future insurers, may hurt your premiums even more than the claims. Other common causes for policies to be cancelled for non disclosure are criminal convictions and bankruptcies.
The UK has recently been battered by storms. Fences have come crashing down left right and centre. And thousand of home insurance policy holders are discovering that their policies do not cover fences. Very few policies cover fences as standard. You usually need Garden Cover, which you’ll pay an extra premium for.
Another common cause for complaint is that an insurer replaces part of a matching set with an odd item. It could be a sofa, or some tiles on a wall or the door of a kitchen unit. If you don’t have the optional Matching Sets cover, then you just have to take what you’re given. Incidentally, it can be tough to get matching sets cover on Contents policies. Very few insurers even offer it. It’s far more common to buy it on the Buildings policy.
I’m stunned by the number of people who, either through sheer ignorance or a wilful desire to avoid paying the right premium for their needs, under-insure themselves. In the worst case under-insuring yourself will lead to a claim rejection and even the policy being cancelled. But even if the insurer does pay out, many will penalise the policy holder by applying an average clause. Which will hurt your pocket.
Another one that sounds obvious, but another one that quite a few home owners don’t quite get. An insurance policy only covers incidents that occur after the policy starts. Not before.
Timing and Evidence
Most policies will insist that a policy holder reports an incident within a certain period of time of the incident happening. Not 15 years later. Seriously. I’ve had that question put to me. Some people are quite, quite mad. Insurers will also want to see evidence of the claim. If you need to claim for the contents of a freezer, it’s probably a good idea to keep the wrappers as proof. Just saying…
Price comparison sites will churn up some amazingly cheap policies. There’s a reason they’re cheap. You can find out what’s missing by reading the documents. Or, if that’s a bit too much effort, by finding out when you claim. If you choose to do it via the former, then keep an eye out for Endorsements, which can change the cover – usually to the policy holders disadvantage. If you choose to find out via the latter route – well, you got pretty much what you paid for. Very little.
Work is Done
I gently head-but my desk in an effort to relieve the stress and replace it with some patience and understanding when a customer starts telling me this story. The catastrophe happened. The customer got his favourite local workmen in to put it right. Then, to get his insurance payment, he sends off the invoices to the insurer to get them rubber stamped. The insurer has just the rubber stamp for them, and the word on that stamp begins with an R, ends in a D and has EJECTE in between the two. You must call the insurer when the event happens. They will send around an assessor and they will arrange for the repairs to be done by their contractors. Unless the insurer authorises you to do so, if you do it yourself, you pay it yourself.
I’ve come across this just once, but I’m sure it must happen more often than I get to see. People cancel their direct debits, for whatever reason. Then disaster strikes. Twice. The incident. Then the claim rejection. Haven’t paid for the insurance. Then you are most definitely at risk of getting a claim rejected.
It happens. Not so often, but it does happen. Angry customer calls to complain his claim is rejected, because the claims agent has told them (he/she draws breath and exhales with as much contempt and scorn as possible) he’s not insured with them. I tappity tap in the provided policy number. And there it is. Lapsed. He/she forgot to renew the policy. That’s bad luck.