One in five home insurance claims refused. AngryPolicyholders.com highlights how to make a successful home insurance claim
One in five home insurance claims were rejected in 2013 and 2014, according to data published in January 2016 by the Association of British Insurers (ABI). The ABI and UK insurers claim that in the vast majority of cases its policyholders, not insurers who are fault.
During the period the Financial Ombudsman (FoS) said it received 1,057 complaints about contents insurance between April and December 2015, of which it upheld 33 per cent. It also received 3,037 buildings insurance complaints, with an uphold rate of 38 per cent.
The most common complaints included insurers rejecting a claim because they considered the damage to be wear and tear, delays in the time taken to repair properties and disputes over loss adjustor valuations.
Misconceptions of what a policyholder is covered for or what constitutes a valid claim are the main reasons why claims are refused, with calls from insurers for more education of consumers to help them understand policies in general. Therefore, today we will look at the most common errors made by consumers and policyholders who purchase home or contents insurance to try to help them avoid basic errors and invalidating existing or new policies.
You cannot insure a property you don’t have an “interest” in
The first and most important point to raise is that you cannot insure a property you have no interest in, financial or otherwise. A basic mistake made by policyholders when taking out building insurance for a property they have no financial interest in. One case in point highlighted to us was damage to a property caused by a flood. The house was insured with building insurance by a lady who was estranged from her partner. As she wasn’t on the mortgage and therefore technically had no interest in the property the insurer was under no obligation to conduct any repairs.
The insurer in question did spend a significant amount repairing the property up to a point until it realised the policyholder actually had no “interest” in it. Now, at stalemate the insurer won’t conduct any further work until the policyholder is able to prove an “interest” in the property. This problem is not as uncommon as you might think. Another example involves someone who decided to travel the world for year and allowed their grandchildren to live in the house whilst they were away.
Believing they were helping they offered to pay the home and contents insurance and took it out in their own name which created the same issue when a claim was made. Luckily in this case the cost of repairs were minor, but it was still an expensive mistake compared to the current annual combined building and content premium of £290.00.
General reasons for a refused claims
Convictions are taken very seriously by insurers when providing insurance. How and why some convictions would have any affect on underwriting policies is not clear, but some – robbery, arson or fraud – are understandable reasons for insurers not to give cover. As previously mentioned not being upfront and honest about any member of the household prior or pending criminal convictions can have serious consequences for policyholders.
Home Insurance declined claims can be a result of policyholders trying to claim for wear and tear. However, home insurance is designed to covers loss or damage resulting from a sudden event, such as a flood or a storm. A policy will usually expressly excludes problems that occur over time, so called “wear and tear” or “lack of maintenance” clauses.
This gives insurers an opportunity to refuse claims if a policyholders claim can’t easily be traced back to a single unexpected event. The insurer will usually argue that, whilst a storm or flood may have had some impact on damaging your home, the real reason it happened was gradual deterioration over time, leaving policyholders in the position to prove them wrong. In the event you find yourself having to prove the damage isn’t “wear and tear” it is advisable to hire a good structural engineer, surveyor or independent loss adjuster to show that damage was more likely to have been a result of a sudden event covered by your policy.
When taking out contents insurance you will be asked to disclose the type of locks your property has, including doors and windows. It is very important you disclose correctly this information, because somewhere in your home or contents insurance policy small print there will be a requirement to fit a certain type of door and window lock or it will mention the locks you disclosed.
Failing to disclose this information correctly or failure by the policyholder to secure the property when vacant will invalidate a claim if you are burgled. Insurers can still refuse a claim if a property is burgled even if they didn’t enter through a door or window that wasn’t secured properly or had the correct locks, but other doors and windows didn’t.
Accidental Damage claims on property insurance and contents is normally an additional add-on to policies. This covers events such as failed DIY efforts e.g. drilling through a water pipe whilst hanging a picture. You should also inform your insurer if you are having any type of maintenance, structural repair, extensions or any other work carried out on the property, whether it be by yourself or a third party tradesman. One case in point – extension to a property – which we were not involved in, the policyholder failed to inform his insurance company he was having a closed extension to a property.
A fire started in another part of the property not connected to the extension causing significant damage. The policyholder fought unsuccessfully for a number of years without a pay-out and the Financial Ombudsman Service backed the insurance company, further denying the claim.
As previously stated you as a policyholder are responsible for protecting your home and taking steps to safeguard against burglary. A staggering 39 per cent of homeowners have admitted to leaving a spare key hidden outside of the property. Seven per cent of policyholders admitted being burgled by a thief who got into their house by using a hidden key. The most popular places for spare keys to be hidden is under plant pots or under front door mats. Other concealed places include in a watering can, buried in a flower bed or hidden in a key safe designed to look like a garden ornament.
Homeowners should choose their hiding places carefully because if they can’t prove to their insurer that they took steps to properly conceal their keys – such as not choosing an obvious hiding place at the front of their house where they could easily have been spotted by an opportunistic thief – then a claim may not be paid out.
Previous claim history and keeping track of purchases
Having to remember your historic claims history over a three to five period, including the dates and value of any claims can lead to genuine errors. However, this is an important part of underwriting your policy, especially if you have a history of flooding or live near a river or stream.
Thankfully, UK insurer have for sometime been sharing their claims data with other insurance companies, enabling them to know your history in advance. One prime example renewing a home insurance policy involved a policyholder who genuinely couldn’t remember the month or the total value of the claim, but were able to give a rough indication as to the year and value. The insurer confirmed the claim and then went on to tell the potential policyholder the correct dates and figures as their previous insurer had shared the claims data.
When it comes to making a claim certain items will require you to provide a receipt or proof of purchase. With modern technology there are easy ways to keep records by scanning or taking pictures of receipts and then emailing them to yourself for safe keeping. If you items of high value, such as jewellery always get an appraisal of the items and a valuation on purchase. Some will offer this service for free knowing you will need it for insurance purposes in the event of theft, loss or damage.
Five reasons why insurance companies may refuse a claim
1. Poor roof upkeep, such as dislodged tiles and cracked chimneys, means the damage that occurred during a storm wouldn’t have happened otherwise.
2. Water damage is caused by bathroom tiling which hasn’t been re-grouted sufficiently regularly.
3. A boiler breaks down which hasn’t been annually serviced.
4. Pipes burst which aren’t lagged and there has been no attempt to insulate a home.
5. Trees are left to grow without being trimmed, which can cause damage to a property’s foundations or external structure.
The dangers of social media
Thanks to an explosion in the use of social media, such as Facebook and Twitter, insurers have taken to using specialist companies or in-house departments to trawl through policyholders social media accounts. The use of social media has resulted in an alarming amount of tweets or posts which give potential thieves or criminals an open invitation to break into properties. Insurance companies are clamping down on claims where it can be proven that policyholders have openly advertised an empty property on their social media accounts.
Chris Hargreaves, founder of AngryPolicyholders.com, commented: “Policyholders have contacted us over the years complaining that claims were being refused because policyholders failed to protect their property, be it a car, home or belongings on holiday.
“Policyholders need to be aware that insurers for a number of years now have been using social media as a way of investigating insurance claims. Thanks to substantial use of social media, including Facebook and Twitter, policyholders are finding themselves invalidating their policies.
“One such case involved a well-known UK insurer who refused a substantial contents insurance claim. The claim was refused because the policyholder tweeted on Twitter that they were sat by a pool enjoying cocktails. Due to the fact the tweets weren’t private and that anyone could have accessed them in the knowledge that their property was empty for sometime the insurer was within its rights to refuse to honour the claim.
Mr Hargreaves concluded: “I’m not advocating that we all rush to shutdown our social media accounts and be frightened of sharing our lives with friends, family or millions of strangers, but there are steps you can take to protect yourself. Remove the options where tweets or posts will disclose your location, because if you tweet from home it will reveal your home address. Post or tweet the following day or week to hide the fact you may be out or on holiday. These are simple steps you can take to not only protect your property, but also your own safety.”
So, when taking out a policy it is vital that you inform your insurance company of all relevant facts which will help prevent a future claim being refused. Also, don’t get complacent. Always shut windows, lock front doors even when you are occupying the property because if a thief walks in and steals a laptop or you car keys your insurance company is well within its rights to refuse your claims.
Top ten tips to follow
1. Ensure you only insure a property you have an interest in. If only one person is on a mortgage still take out the policy in joint names as your separate contents will be protected as well.
2. Disclose any criminal convictions, even pending charges, court cases or trials.
3. Ensure your property is well maintained (see top 5 reasons for refused claims) and know the types of locks used in your property.
4. If a garage is not attached to the property and is across the road or elsewhere always make this clear to your insurance company to ensure the contents are insured.
5. Never leave keys outside the property where they could be easily accessed by third parties. Also keep track of who has sets of spare keys or regular access to the property.
6. Keep receipts for high-value items. Store them electronically in case proof of purchases/receipts were to be destroyed in a fire or flood.
7. Notify your insurer if work is to be carried out at the property – DIY or by a third party.
8. If the property is to be vacant always inform your insurance company. Most insurers will notify you in their small print of timescales before you have to notify them.
9. If you let your property short or long-term, always notify your insurer as there is a commercial arrangement in place and landlord insurance may be deemed more suitable.
10. Don’t allow thieves to know your whereabouts by broadcasting your empty property on social media. You wouldn’t put an advert in the local newspaper telling everyone you are going on holiday, so treat social media the same.