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How to make sure your claim gets paid
By Liam Tarry
Life, as they say, is full of surprises - and that's why insurance has become a multi-million pound industry. From ensuring we're covered if we bump the car or lose our luggage on holiday to providing support for our loved ones should the unthinkable happen, insurance provides you with financial peace of mind.
However, claiming can be easier said than done - with the oodles of small print that accompanies most policies catching many people out. So, to maximise your chance of making a successful claim, it pays to know exactly how your policy works and the common hurdles that can come between you and your payout. To help you through the maze here's our guide to some of the policies you're most likely to hold.
Life and critical illness cover
Critical illness pays a lump sum if you're diagnosed with one of the conditions covered by the plan (usually, up to 30, including cancer, heart disease, multiple sclerosis and stroke). However, while the vast majority of claims are paid, at least one in six are rejected.
Half of these rejections are because the claimant's condition does not meet the strict definition laid down in the minutiae of the policy. So, for example, while cancer is covered, it will typically need to be at a life-threatening stage, meaning people with less advanced cancers may not be covered.
Matt Morris, policy adviser at Lifesearch, explains: "You may be diagnosed with a disease that isn't severe enough to claim. There are forms of prostate cancer, for example, that aren't regarded as serious enough."
To keep plans affordable insurers need to impose such limits - although that's no consolation if your claim is turned down. "The best way to avoid disappointment is to make sure you check what you're covered for before signing up," says Morris. If you've already bought your policy, it's worth digging it out and reading it from cover to cover.
Whether your condition is severe enough to warrant a claim is, of course, out of your control. However, for both life and critical illness insurance, what you mention during the application process can have a big impact on your chances of making a successful claim.
Claims are often turned down for 'non-disclosure'. This is where policyholders fail to provide the insurer with all the necessary information about their state of health.
A typical case of non-disclosure might be not telling your insurer you smoke, have high blood pressure or are overweight. Claims have also been refused on grounds of falsified ages and failure to mention visits to specialists. Morris says: "It's in your interest to tell the truth about your health."
If you already have a policy and feel that you were less than honest on your application or that you failed to mention a health concern that existed prior to you taking out the policy, then talk to your insurer. It may mean that your premium goes up, but at least it gives you the peace of mind that the policy will pay out should you ever come to claim.
The Association of British Insurers (ABI) has clarified the rules on non-disclosure to make it easier for the industry to take a consistent approach. It now cites three levels of non-disclosure: innocent - where it's not the customer's fault and full payout is given; negligent - where a partial payout is given; and deliberate - where a customer knowingly gave false information and no payout is given.
Travel insurance
So once again it pays to be honest. In many cases your insurer will simply charge you a higher premium, but in some cases it may not be able to provide adequate cover. However, that doesn't necessarily mean you won't be able to get insurance at all, explains Graeme Trudgill, spokesperson for the British Insurance Brokers Association (BIBA). "You can find insurance brokers that cover the majority of medical conditions if you shop around." For more information go to biba.org.uk or call its helpline on 0870 950 1790.
According to Halifax, some 1.4 million Brits are victims of theft on holiday each year, yet should you have your personal possessions lost or stolen the majority of policies will only cover them as an additional extra. If your policy does cover personal possessions, be sure to itemise the value of the expensive items before you go.
"All insurers will need evidence of value and ownership," says Trudgill. "This can include receipts, credit card statements or just a photo. More expensive items, such as jewellery, have to be named on your home insurance policy, so let the travel insurance company know when you buy the policy."
Demonstrating a duty of care is also important when submitting a claim for loss or theft of your possessions abroad. If you were to leave your wallet or handbag unattended on the beach while you went for a swim, for example, it would be deemed that you haven't taken reasonable care. It's best to keep your possessions on you at all times or safely secured - if in doubt, use the hotel safe.
You should also notify the relevant authorities as soon as a loss or theft occurs. Reporting it instantly to the police, your tour operator and hotel manager also helps demonstrate that your claim is not fraudulent. "If the insurance company thinks you're not making an effort, you'll struggle with your claim," warns Trudgill. "Contact your provider as soon as possible to register your claim, so have the phone and policy number to hand at all times."
And remember, your insurer won't pay out if you have an accident while drunk. According to the NHS, it's safe for men to drink no more than three units of alcohol a day, and women two units. While these levels would undoubtedly put a dampner on a stag-do in the Balearics, sticking to them will increase the chance of a successful claim.
"Claims handlers will always seek a medical practitioner's advice regarding alcohol intake," says Jo Roberts, spokesperson at Halifax. "We're aware that many people enjoy a drink on holiday, but if a doctor believes that an accident happened as a result of intoxication, your claim would be declined."
Home insurance
According to BIBA, the average house has around £35,000 worth of goods under its roof, yet most plans fall well short of this. Trudgill says that most people simply don't appreciate just how much their possessions add up to. "It's worth going through your house room by room to total up all of your possessions and make sure you're fully covered before you buy a policy," he advises.
You would be excused for thinking that if you don't accurately assess the value of your possessions you'd simply be able to claim up to the limit you'd insured, and then plug the shortfall yourself. However, insurers don't work this way, so under-insuring can really leave you out of pocket.
Say, for example, you had a policy for £20,000 and claimed for £40,000 worth of items, you could only receive £10,000 - half the sum insured. "As home insurance is a contract of good faith, insurers are well within their rights to claim you've not been totally honest," explains Trudgill. "Always keep your sum insured under review, especially when you renew your policy."
Security is also essential, so keep windows and doors locked - if you've been negligent, the insurer may not pay up.
Motor insurance
"For minor prangs, you should take down the registration number of all the cars involved and the names of any witnesses, but for more severe accidents you should call the police immediately," says Ian Crowder, spokesperson for the AA. It's also worth recording exactly what happened as soon as possible, as accidents can be difficult to recall the longer you leave it. "Don't overlook using your mobile phone to take pictures or videos of the accident scene," he adds. "Even if it's not used by the insurer or police, it can help jog your memory."
If your car is written off, you'll be offered what the insurer deems to be the current market value, so don't expect new for old. In some write-off cases, you may have to go back to the insurer with evidence that the car is worth more. With smaller claims, such as a smashed windscreen, don't get it repaired immediately at a local garage - it could leave you out of pocket as most car insurance companies have tied deals with approved windscreen repairers.
Non-disclosure, such as failing to mention any motoring convictions or previous accidents in the past five years, can also hamper a claim. "If you're involved in an accident it'll all come out of the woodwork, your claim will be rejected and the third party can even pursue you through the court for damages," warns Graeme Trudgill. "Keeping your car on the street and claiming it was secure in a garage is a common reason for rejection. And it's often essential to have a tracker alarm fitted if your car's an expensive one."
Demonstrating a duty of care also applies, so leaving the keys in the ignition on cold winter mornings or your valuables on show would also invalidate your claim. Likewise, failure to get your car properly serviced, under-inflated tyres and passengers not wearing seatbelts can all come between you and your payout.
Payment Protection Insurance (PPI)
It can be a real struggle to claim successfully on PPI. In general, you will be excluded from claiming if you are self-employed, not in full-time employment for six months before taking up a policy, a non-UK resident, have a pre-existing medical condition or take part in dangerous sports or occupations. The single largest reason for absence from work in the UK is back problems, yet they are specifically excluded from cover with the majority of PPI policies. Mental health problems, such as stress and anxiety, are also often excluded - the second most common reason for being absent from work.
Pam Needham, director of independent PPI provider antinsurance.co.uk - one provider that can cover back problems and stress claims - believes that making a successful claim rests on reading the small print carefully. "Too many people take a policy out without understanding that they may not be covered. It all comes down to the terms and conditions, so call up your PPI provider and get your queries answered before you take out a policy," she advises.
If you already have cover, double-check exactly what you're covered for and take a fine toothcomb to the small print to ensure you would actually be eligible to claim. If you aren't, you may have been mis-sold the policy and be entitled to claim back your premiums.
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