2 February, 2016

ABI Reveal 1 in 5 Household Insurance Claims are Rejected

The Association of British Insurers (ABI) has released statistics on payout success rates for the first time. The findings shows that only 79% of all home insurance claims are were successful, meaning that at least 1 out of every 5 claims was rejected.

This is vastly different to claims for motor insurance, in which only 1 in 100 claims were rejected. Also, from all travel insurance policies only 13% of claims were rejected.

The statistics were compiled by the ABI from 6.9 million insurance claims made during 2013 and 2014. Data was taken from 19 separate insurers processing 4.3 million motor insurance claims, 1.8m home insurance claims and 800,000 travel insurance claims.

Average payouts for claims varied from £2,250 for household claims, £2,160 for motor claims and £884 for travel insurance claims.

With over 20% of all home insurance claims rejected, the ABI’s findings highlight the uncertainty of consumers regarding their property insurance.

The Financial Ombudsman Service (FOS) also released separate data on the 5,504 rejected home insurance claimsbetween April to December 2015. Of all of these claims, 38% were settled in the customers favour by the FOS.

So why were so many home insurance claims rejected?

The main reasons for rejection of home insurance claims were:

  • Wear and tear
  • Claim below policy excess
  • Accidental damage

First of all wear and tear is a form of loss that cannot be covered through insurance. Wear and tear is the gradual deterioration of something, such as a flat roof. Flat roofs do not generally last much longer than 10 years and replacing them would be classified as the ongoing maintenance of the home. Ensuring the home is well looked after is a requirement of the home owner and not your insurer. Home insurance provides cover for a sudden and unexpected damage, if it is known the roof is already old and it suffers damage the liability will fall on the home owner.

Secondly claims can also be rejected if the loss amount is less than the policy excess. An excess is the amount that you must pay towards the cost of making a claim and there will be an excess on all general insurance. The excess amount on your policy can vary, so make sure that you carefully read your policy documentation; the total excess is the combined voluntary and compulsory excess. Insurers will set an excess to avoid paying out lots of very small losses. An excess is also designed to ensure that property owners take greater care as they will also have to bear a portion of the cost if a loss occurs.

Lastly, many people claim for accidental damage on their home insurance, only to be disappointed in finding that it is not covered when they make a claim. Accidental damage is an optional extra on home insurance and would not normally be included in the ‘standard’ level of cover. It is important that you carefully check your policy documentation or speak to your insurer if you have any queries about your level of cover.

Accidental damage will generally not cover:

  • Damage by children
  • Damage by pets
  • Poor DIY
  • Deliberate acts

Why were 13% of travel claims rejected?

Travel insurance claims were rejected for two main reasons. Firstly, it was the failure of the insured to notify their insurer of any pre-existing medical conditions before taking the policy out. A customer’s medical record is one of the most important factors in travel insurance as the cost of medical treatment varies across the world. It is also the reason why you may find that travel insurance to the United Sates is more expensive than anywhere else.

Secondly, travel insurance claims were also rejected if the policyholder is unable to prove that belongings they once owned had been lost. To make a valid claim for lost or damaged property on holiday always make sure that you have kept the receipts for the most valuable items.

Similar to home insurance, many travel insurance claims were also rejected as they were less than the policy excess.

It’s better to talk

These results from the ABI highlight the necessity to speak to a qualified insurance consultant before taking out an insurance policy. By speaking to someone who knows the industry they can answer all questions you may have before taking out insurance.

Our agents at Call Wiser all have the insurance industry certified CII qualification, so they know what they are talking about! We can help you sift through the jargon and answer any queries you may have on the level of cover each insurance policy provides.

Just a simple conversation with one of our experienced staff can help you make an informed choice for your insurance. If you are not sure we can provide you with advice, guidance and of course answer any questions you may have so that you know exactly what can and cannot claim for.

We work in partnership with a large variety of the top insurers in the UK to help find you home insurance that meets your needs and your budget.

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