Most common reason insurance claims get rejected as 'super complaint' launched

Insurance is one of those essential things that we need to take out to protect the things we love.

Most people will have at least two insurance policies, with motor, home and contents, travel and pet insurance amongst the most popular.

The insurance industry is a big deal. Its estimated that there are 35 million home and contents policies alone and a whopping 44 million motor insurance policies. In all, that’s over £80billion in premiums – not counting life and protection policies.

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However, the insurance industry has come in for quite a bit of criticism in recent years. First the regulator, the FCA banned the ‘loyalty charge’. This is where you ended up paying hundreds, and in some cases thousands, of pounds more than new customers if you just let your insurance renew every year.

Then the cost of policies rocketed, though many people reported they got major discounts if they complained before their policies renewed.

Last week the FCA announced that over 270,000 motorists were to receive £200 million in motor insurance compensation after insurers paid out less in claims than they should have done.

Which brings us to this week, when the consumer association, Which? announced that it's bringing a ‘super-complaint’ to tackle ‘widespread failings in the travel and home insurance market’.

In their investigation, Which? found evidence of poor claims handling, inappropriate sales processes and firms not following the law and regulations properly.

Needless to say, this announcement has caused considerable concern from people all around the UK. I spoke to Which? Director of Policy and Advocacy, Rocio Concha, who told me: "In only a short space of time since submitting our super-complaint to the regulator, we've seen an outpouring of frustration and anger from consumers about their experiences with insurers and support for what Which? is doing.

"On top of all the evidence we have sent the regulator, strong public support should make the regulator sit up and take notice that things are going badly wrong in the home and travel insurance markets - and that significant change is needed to address the problems we have raised."

I’ll cover the Which? super complaint and what it means for you in a column in the coming weeks. But in this feature, I’m addressing one of the most common questions Mirror readers ask me: what are the main things that aren’t covered by insurance policies.

Wear and tear

Let’s start with the biggie! The single biggest reason why insurance disputes arise is ‘wear and tear’. Over time, everything gets a bit worn around the edges. Even me! Your car parts may need replacing or your roof tiles need a spruce up. But wear and tear is a contentious area of insurance because it’s subjective. Things that you own will reach the end of their natural life - but at what point does that become your responsibility?

Insurers often refuse claims because they feel that the damage you are claiming for is as a result of existing wear and tear. The problem is many insurance contracts are sometimes unclear around the difference between this and actual damage arising from a ‘claimable incident’.

As a general rule, insurers define wear and tear as ‘natural damage that occurs to contents or your property structure over time’. This means that if they believe you should have carried out repairs – and the damage you have claimed for is as a result of failing to do this – they can turn down the claim. You may find that there are specific maintenance requirements in the contract for things like your roof or trees on your property. This is a good thing, because if you follow the rules and your property is damaged, then your claim should succeed.

But they don’t get it all their own way. As I often explain in this column, unclear or vague contract terms mean you can’t be expected to have understood what the insurer requires, unless it’s obvious you have let the thing you’re insuring fall in to disrepair.

In a dispute over a claim, use evidence, like photographs of your property and invoices for work you’ve had done to dispute the insurer’s initial view. A lot of these claims arise after storm damage, which means you can turn to weather data to prove that the storm was sufficiently strong to have led to the problem.

Sickness, medical conditions and disclosure

A wide variety of insurance policies require you to disclose information about your health. So it’s vitally important you tell the insurer about pre-existing health conditions.

The law around disclosure was made more consumer-friendly in 2012 so both you and the insurer take equal responsibility for this. You must tell the insurer about any significant health conditions you have had over the last few years. This is because having these conditions could affect how much you pay for the policy - or if you are offered a contract at all. However the insurer must also ask you clear questions so you know precisely what you have to disclose.

But what do you have to tell your insurer? After all, not every trip to the doctor involves a diagnosed condition. As a general rule, you will be asked to disclose:

• If you’ve had a serious condition, even if it’s in remission.
• If you have an ongoing condition that you are receiving treatment for.
• If you’re waiting for an operation or have had one over the last few years.
• If you’re waiting for test results, from blood tests to x-rays or are being tested for something.

Disappointingly, some insurers have been known to focus on accidentally undisclosed things in your medical file as a way to reject a claim. This is known as ‘fishing’ and it is not allowed. The FCA takes a dim view of such behaviour.

An example of this could be if you forgot to disclose a trip to the doctors because of painful pins and needles, which could occasionally indicate the possibility of a stroke. If this is used to reject a claim for an unrelated condition like a heart attack, then that’s fishing - because the two things are unrelated. If you have a stroke, but they didn’t mention disclosing things like pins and needles in the contract, that could also be considered to be unfair.

Some insurers ask you to disclose every trip to the doctors you’ve had over the last year or two. others, just the occasions where you had treatment or tests. Remember that the insurer must ask you all relevant questions, so if they’ve been vague or unclear, you can complain.

Like for like and why payouts might be disappointing

Even when your claim is fully or partially upheld, it’s not always clear what you’ll get paid. Insurance is ‘like for like’ which means you will be paid what it costs to replace the specific item you are claiming for – not what it would cost to purchase the current version of that item.

Imagine your five year old washing machine has been damaged in a fire and you make a claim under your contents policy. If you claim successfully, you will be paid out what it costs to replace the five year old washing machine model, not a super swanky new one. Alternatively, they could give you vouchers which might let you get a slight upgrade, but not a new, top of the range version.

Things get really complicated if you’re after replacements for things like damaged kitchens. If a cupboard door needs to be replaced, you might not be able to get that exact model any more. The insurance company will not pay for a new kitchen, or even replacement doors that are all uniform. You’ll get a contribution to a basic repair.

Personal belongings and policy limits

Personal belongings are covered by your home and travel insurance policies, but only up to certain limits. However, over the last decade, the value of the items we carry around with us has increased dramatically.

If you go away on holiday with the family, chances are you’ll be carrying around £2000 to £3000 worth of electronic items alone, though travel insurance policies will generally cover personal possessions for between £1,000 to £1,500. So only take the tech you need.

Personal belongings may sometimes be covered by your home insurance, but there are loads of policy limitations. As soon as you leave your home, many personal items will not be covered. While at home, there are many things that aren’t covered by your contents insurance, including; spillages, slips, accidents, careless behaviour and more. You can increase or expand accidental damage cover but it’s not going to pay out for everything.

Disasters, catastrophes and doom

A bit bleak this one. Catastrophic events are generally not covered by insurance. This can include things like:

• War and terrorism
• Tornados
• Floods
• Volcanos
• Earthquakes
• ‘Acts of God’

These events may seem unlikely. However, bear in mind that in recent years we’ve seen holidays increasingly ruined by devastating fires or unexpected floods. Natural disasters are increasing dramatically, no matter what Donald Trump might say.

Any insurer rejecting a claim on grounds of catastrophe must make sure that they are following strict regulatory guidelines. And somewhere between insurers, airlines and the government, when disaster strikes, some or all of these organisations will get you home.

Making a complaint

The Financial Ombudsman Service (FOS) is a free alternative to the courts. The ombudsman deals with thousands of insurance-related complaints every year – the majority of them relating to claims.

I used to work for the ombudsman many, many years ago, so I know full well how they view insurance claim problems. For example, the FOS takes the view that just because something is in a contract, it doesn’t make it ‘fair or reasonable’. So when considering your claim, the ombudsman might decide that a clause in a contract is unfair, or vague and too broad or open to interpretation. They may also conclude that the reasons for rejecting a claim aren’t fairly considering all the facts in the case either. These are precisely the insurance industry issues that Which? have highlighted as being unfair in their super-complaint.

So if in doubt, take things further! It’s free!

• Martyn James is a leading consumer rights campaigner, TV and radio presenter and journalist.