Insurance firms get tough on claims
By Margaret Taylor Personal finance editor
YOU may have already noticed, but the cost of insuring your home is on the rise. According to the AA’s benchmark British Insurance Premium Index, home insurance premiums had risen for three consecutive quarters at the end of June this year, with the cost of a typical combined buildings and contents policy in Scotland increasing to £152.88.
Nor is this a trend that is about to go into reverse, with the rate of insurance premium tax rising from 9.5 per cent to 10 per cent on October 1.
However, while the impact of that and an earlier tax rise from six per cent to 9.5 per cent in November last year has added £12.50 to the average combined policy, another major contributor to the rising cost of insuring a home is weather-related claims.
As Michael Lloyd, director of insurance at the AA, says: “Rising premiums reflect growing nervousness about potential severe weather claims which many climate experts predict.”
For those living in the west of Scotland, where heavy rain is a regular occurrence, that should be good news: if premiums are going up to cover the potential cost of repairing weather-related damage then insurers will be less likely to turn down such claims.
That is not necessarily the case, however, as one reader of the Sunday Herald found out this summer.
The reader, who has asked not to be named as her case is still ongoing, put in a claim for damage caused to a communal hallway when a day of soaring temperatures was followed by torrential rain, which caused a roof valley to overflow leading to the collapse of an internal ceiling. As was the case with her two neighbours in the converted townhouse in Glas- gow’s west end, the reader put in a claim to cover the cost of an emergency repair to the roof as well as the repair of the ceiling and redecoration.
While her neighbours had no trouble securing payouts on their separate home-insurance policies, the loss adjustor assigned by her insurance company claimed there had not been enough rain on that particular day to cause the damage claimed for.
Despite providing a report from the roofer who carried out the emergency repair as well as numerous newspaper reports detailing the severity of the weather on the day in question, the insurance company stuck with its original decision.
Gordon Duncan, head of corporate for Scotland at insurance broker Lockton, said that while companies are entitled to refuse such claims if the damage was the result of wear and tear rather than weather, the fact that the two other insurers paid out makes the case “damning on the insurance sector”. He added: “I’d be exceptionally disappointed with the insurance sector if honest claims were being rejected – that’s not how insurance should work.”
Figures from the Association of British Insurers (ABI) show that home insurance claims have the lowest success rate of the most common types of insurance, with 99 per cent of motor insurance claims successful, while 87 per cent of travel claims and 79 per cent of home insurance claims secure payouts. The most common reasons for home insurance claims failing are that the damage is caused by wear and tear, which is not insurable; the claim value is less than the policy excess; or the consumer has not selected the right kind of cover.
However, ABI spokesperson Malcolm Tarling noted that insurance companies are generally “getting tougher” when it comes to dealing with claims, which can have the knock-on effect of a small number of genuine claims being turned down.
“Insurance companies have to make sure they reduce the scope for fraud, an ongoing battle, but it will never be used as a smokescreen to avoid paying genuine claims,” he said.
When genuine claims do fall foul of insurers’ tougher stance, there are a number of avenues available, though claimants must be persistent.
In the first instance consumers should discuss the case with the loss adjustor appointed by the insurance company because, as Gordon Duncan at Lockton points out, they are “independent by charter” and so by definition should be aiming to achieve the best possible outcome for both the insurer and the insured.
Malcolm Tarling at the ABI agrees. “People should be talking to the loss adjustor because they need to discuss what to do to take the claim forward.” If that does not resolve the matter, complaints should be made directly to the insurance company’s complaints department, with Tarling noting that the Financial Ombudsman “can intercede if there’s an impasse”. In such a case the onus would be on the customer rather than the insurer to contact the ombudsman.
If all else fails, it might be worth considering shelling out to have a broker handle the matter. “Your insurance broker will support you throughout the claims process and ensure you get a fair payout,” says Graeme Trudgill, executive director at the British Insurance Brokers Association. It’s a cost that few will want to pay, for what should be a simple claims process, but if it means the difference between receiving what is rightfully owed under the terms of an insurance policy and nothing, some may consider it a price worth paying.