When Will an Insurance Company Not Pay Out?

Household claims can prove to be complicated affairs - especially if you have little or no knowledge about insurance or the claims process.

When you register a household claim, (buildings, contents or for personal possessions), your Insurer will take the details of the incident such as the date it occurred, the type of incident and the circumstances leading up to and around to the loss or damage.

An initial assessment will be made based on the value and complexity of the claim. If it is of low value and straightforward, you will likely have it processed quickly. Frequently however, the process can be longwinded, involve other parties (such as Loss Adjusters) and require a lot of input from you in submitting evidence and documentation.

The most frequent reasons why Insurers will reject a claim include the following:-

The loss or damage occurred before the policy started
You have no 'insurable interest' in the property that has been lost or damage - this means that you don't have a direct financial interest in the property (such as for an item you borrowed belonging to a friend)
There has been no insured peril occurring that the policy covers - if the policy does not list it as being covered ie: fire, then no cover will be in place
The loss or damage is not consistent with the reported event (ie: if a claim is made for storm damage but considered to be wear & tear which is not covered)
A policy exclusion applies (most insured events have a number of exclusions attached to them which will be detailed in the policy booklet)
If Insurers believe that the claim is fraudulent or exaggerated and can prove this, this is likely to result in the policy being cancelled and in some cases, prosecution
If during the claim investigation, Insurers discover that incorrect facts were disclosed when taking out the policy (such as previous claims, bankruptcies etc) and these facts had they been disclosed correctly would have caused them to refuse you cover or charge a higher premium then they may choose to reject the claim and cancel the policy

If the claim has been accepted, there are certain factors which may cause the claims value to be reduced:

If the repair or replacement costs are considered not to be 'like for like' (exactly the same or a near equivalent) and a higher value than necessary
If the selected sum insured for the buildings or contents cover is not adequate (for buildings, it must be set at a level to rebuild the whole property and for contents, the figure must represent the value of your entire contents replacement on a new for old basis). If you are underinsured, Insurers may reduce the value of your claim settlement (most policies will contain a clause specifying this)
A policy limit applies - household policies will have several limits such as for valuable items, contents in the open, bicycles, money and many other things - this will be detailed within your policy schedule

When making a successful household insurance claim, knowledge is power. Visit our website to take part in our free discussion forum or if you need any help with your insurance claim http://theclaimsvault.co.uk/

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