Insurance policy exclusions – Why won’t they pay my claim?

Insurance policy exclusions. It can seem that they are designed to catch you out when a situation arises and you need to make a claim. But why do so many people get caught out by the ‘small print’ contained in insurance policies?

Contrary to public perception, the insurance industry has tried for many years to simplify policy wordings and make them user friendly and easy to understand. The Financial Ombudsman has a history of ruling against insurers when a policy is ambiguous, making them responsible for paying claims, so there is no benefit to insurers in having complicated wordings that cannot be understood. Despite efforts from the industry, many unfortunate policyholders are still ‘caught out’ every year resulting in declined insurance claims.

Insurance brokers also play their part in passing on relevant information and have strict procedures when selling or renewing insurance policies to ensure the policyholder has all of the information needed to make a decision. So, with all the information available why don’t consumers understand the policy requirements?

Forget about insurance for a minute…

Modern consumers tend to want things immediately without having to think too much, read too much or pay too much. Here are some examples;-

“Tick this box if you accept our Terms and Conditions” – how many times have you seen this on a website and accepted the Terms and Conditions without even reading them? Then you hand over your money without so much as a second thought.

Have you ever built a flat pack item of furniture without even opening the instructions, let along reading them?

How often have you bought an item such as a television, computer or phone and switched it on, relying on trial and error, playing with it until it works in the fashion that you want it to?

We as consumers are inclined to buy, then work out afterwards how something operates. Unfortunately, this isn’t a wise strategy when buying an insurance contract, as you may only find out how it works when you are told your claim isn’t going to be paid.

Back to insurance…

It is probably a sign of the times that unfortunately the immediacy and instantaneous results gained from a computer quote gives the user the impression they can buy it within a few minutes, give them your credit card number and its done. The consumer (now a policyholder) can indeed do business that way without having to think too much – but at what cost?

On Channel 5’s Benidorm ER recently (a programme about medical treatment of British tourists in the Spanish resort) there was an injured electrician who was saying he had bought an expensive insurance policy that (in respect of emergency medical expenses) “…covered everything up to £10m”. That was mostly correct but it excluded private hospitals. As he was admitted to a private hospital following a sting ray attack, the insurers told him they were not going to pay and he had to sign himself out, pay for the treatment he had already received and be re-admitted to a public hospital. So although he had taken the time to do a little research and knew he was covered for 10m, he didn’t read the policy when it had been sent to him and this resulted in a significant cost.

Read the documents…

When you obtain an insurance quotation it will include a summary of cover, Terms of Business and a statement of your demands and needs, showing that the firm giving the quotation have understood your requirements. You will be provided the important information necessary for you to make an informed choice as to whether you wish to proceed with the insurance. At this point you will be able to read the terms and conditions that apply to your insurance. You will be able to request a full policy wording before proceeding with cover.

If you accept the quotation you will be issued with a Policy wording and Schedule of Insurance, which will contain all of the information relevant to your policy. You must read your documentation otherwise you will not understand what conditions are and you will not be able to comply with them.

In summary

There are many types of exclusions that apply for all classes of general insurance. However, there is one piece of advice that we would offer to all policyholders – read your paperwork.

Insurance policies vary and will undoubtedly contain exclusions, warrranties, conditions that WILL affect your policy cover and will have an effect on a potential claim in the event of an incident occurring.

Insurers are not here to trick you into paying your premium and then abandoning you when something goes wrong – they will pay claims if you have complied with the terms of the policy but in order to comply, you need to have read it first…!

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