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What to do if your insurance claim is rejected

If your insurance claim is rejected, all is not lost. There are a number of steps you can take to try to secure a payout if you think your insurer has made an unfair decision.

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When your insurer fails to pay out in full, or at all, on your insurance claim, it can be a major blow. Insurers pay careful consideration to your policy and your claim before deciding whether to pay out and there are a number of grounds upon which an insurer may reject an insurance claim.

Why might an insurance claim be rejected?

Possible reasons why your claim may have been rejected include invalid information being given, being underinsured, the item not being included in your policy, or you may have missed premium payments. Whatever the reason given, you may well be shocked to find that your insurance claim has been rejected by your insurer.

Here are some of the most likely reasons that an insurance claim will be refused:

  • The item you are claiming for is not included in your policy.
  • You didn’t hold a valid policy with the insurer at the time the item was lost, damaged or stolen.
  • You have not kept up with the payments of your premiums.
  • You withheld information when making the claim.
  • You were dishonest in some way when making your claim.
  • There was a clause in your policy that meant the item you claimed for was not covered. This is called an ‘exclusion clause’.
  • There is a condition in your policy to which you haven’t kept.
  • You have failed to communicate a change in circumstances to your insurer, which affects the validity of your policy.
  • You have made a mistake on your claim or you have failed to follow the process properly.
  • Your insurer may consider that there was a lack of due care and that the item was damaged, lost or stolen as a result.
  • You may be underinsured.
  • Your claim is for more than the insurer thinks the item is worth and, therefore, the payout is less than you expect.

My insurance claim shouldn’t have been rejected, what should I do?

Firstly, you should make sure your insurer has given a reason for the refusal, as they are legally bound to do so. Once you have established the reason, it’s vital that you check through your policy details to establish whether the reason given is valid, in your opinion.

Check your documents thoroughly

What you need to check before making a formal complaint:

  • Check that you gave all the information you were asked for when you initially took out the policy. Since April 2013, insurers have been required to ask the questions set out under the Consumer Insurance (Disclosure and Representations) Act 2012. Bear in mind that you must take reasonable care when giving answers to these questions and that you must answer them honestly.
  • Fish out proof that you notified them of any changes in circumstances, such as proof of address.
  • Check the wording of your policy carefully to ensure your claim is covered.
  • Make sure you provided the correct information.

Get an expert’s point of view

If your unpaid claim needs to be assessed by an expert, you can call in a ‘loss assessor’ to evaluate whether the item being claimed for should be covered in your policy. An example could be if damage to your home is due to wear and tear, according to the insurer, but you consider it to be the result of a specific incident.

Taking it further

If everything suggests that your claim should have been paid out, firstly try to negotiate with your insurer. It may be that a quick phone call will clear up any ambiguities in the claim that you, or your insurer, may have overlooked.

If this fails, then it may be time to make a formal complaint through your insurer’s complaints process.

How to complain formally to your insurer:

  • It’s a good idea to make it clear that your letter is a complaint letter at the top.
  • Include the date and your policy number.
  • Clearly state your complaint and supply the insurance company with any evidence you have that backs up your claim.
  • Decide what you would like the insurer to do to put the situation right and state this clearly in the letter.
  • Clearly state that you will take the matter up with the Financial Ombudsman should it not be resolved to your satisfaction as a result of making the complaint.

Taking your complaint to the Financial Ombudsman Service (FOS)

The FOS was set up to help work through disputes between financial providers and their customers - saving both parties from having to take cases through the courts.

You can take your complaint to the FOS, but they will not necessarily take it on.

Reasons why the Ombudsman may refuse to take on your case:

  • If you already have had a court look into it.
  • If you made a mistake in your initial application.
  • If the insurer you are dealing with is not regulated.

If they decide they will deal with your case, the first stage involves an adjudicator examining all the evidence and coming to a conclusion. If this is not acceptable to the parties involved, the case can then be passed on to an Ombudsman for review. They will take a fresh look at the case and come to their own conclusion.

Last resort: taking it to court

As a last ditch attempt to get your claim paid, you can consider taking it to court, although it is wise to seek the advice of a lawyer to get an opinion on whether this would be worth your while in light of the likely expense involved.

Finding that your insurance claim has been rejected is always going to be disappointing but, as you can see, there are a number of routes you can take to try to make things right. An important thing to remember is that having a thorough understanding of your policy and what it covers is the first step to ensuring that your claims are paid out and you are not left unexpectedly out of pocket.

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