I was watching the BBC’s Rip Off Britain earlier this week, which highlighted the case of a couple whose bungalow had burnt down after fire had spread from a neighbouring property. Their insurance claim had been refused because they were not living there (they were completely renovating the property). The insurer insisted this had not been declared when the policy was taken out, and maintained that cover would never have been approved if this fact had been made known to them.
Make sure the information you give your insurer is correct or any claim you make could be turned down
I cannot state too strongly how important it is to give accurate information to your insurer when you take out a policy – and also to ensure you update them if your circumstances change. In the case of the couple featured in Rip Off Britain, this was exacerbated by the fact that there was a broker involved, it’s just as vital to check that the information an intermediary gives to the insurer on your behalf is correct and complete.
Luckily, the story had a happy ending: thanks to the Financial Ombudsman Service
They had initially supported the insurer’s decision, but eventually changed the ruling, and the couple received a full pay out. The FOS accepted the argument that the couple had told the broker that they would not be living in the property initially but that this had not been communicated to the insurer. But this decision in favour of the policyholder is highly unusual, as I know from similar situations when working with people who are making an insurance claim. I’ve seen many cases where people have had rulings against them and it’s not easy to reverse an FOS decision – but it can be done.
Don’t rely on a broker – the buck stops with you
It’s always important to check that the details in your application are correct, but taking out insurance through a broker increases the chance of mistakes creeping in. When an insurance broker asks a client all the necessary questions about the risk, occupancy, previous claims or any other pertinent information, they then pass the information on to the insurer who will compile a ‘Statement of Fact’ which records the answers. This is then sent to back the client to check, and the onus is on them to ensure that all the information is full and accurate, otherwise a claim might be refused – as in the case of the Rip Off couple.
Explain your situation if there’s anything unusual or short-term
Unfortunately, some applicants don’t bother to check the Statement of Fact and assume the information is recorded correctly. This is compounded by the fact that many Statement of Fact documents are standardised and only give the option for yes and no answers. So, to use the example of the TV programme, it’s possible that the Statement had the question “will the property be permanently occupied by you” and the answer was recorded as “yes”, but this did not record the explanation the client gave to the broker that they would only be moving in after the refurbishment had been completed.
Any minor innocent error could invalidate your claim
Of course, a competent broker would ensure that the insurer was aware of the full facts. But this doesn’t eliminate the need for the policyholder to check the Statement and contact the broker or the insurer if there is any doubt over any of the details. Any minor innocent error in the information given to the insurer can invalidate the policy, so you can’t leave it until you need to make a claim, because by then it is likely to be too late.