Archive: Tue Mar 2016

Mortgage Intelligence update: 3 reasons your client’s home insurance claim might be rejected

Head of Mortgages and Insurance Stephanie Charman highlights the main reasons your client’s home insurance claim may be rejected and the importance of getting to know their policies.

Research from the Association of British Insurers (ABI) has revealed that more than one in five home insurance claims are rejected. The figures have been published after an analysis of 1.8 million claims made during 2013 and 2014.

But under what grounds might your client’s claim be rejected and what can they do to protect themselves?

Wear and tear

The ABI stated that this was the main reason for home insurance claim rejections. If the policy holder fails to maintain the property to an agreed level, then this can lead to wear and tear that would not be covered.

Storm damage caused to a property’s roof might well be a valid reason to claim, but damage caused from a lack of repair may not be. In a nutshell, home insurance is there to cover clients in the event of a sudden or unexpected event such as a violent storm, not for the repair of property over time.

Claiming below the excess

One of the other reasons for invalid claims highlighted by the ABI, was when the value of the claim fell below the policy excess. The excess is of course the amount the policyholder must pay out when a claim is made.

Being tempted into increasing the excess when the policy is taken out in order to decrease the premiums might seem financially beneficial, especially if they don’t need to make a claim. But it can also increase their chances of non-payment when they eventually do, especially if the excess covers a relatively wide variety of circumstances.

The wrong level of cover

Unlike motor insurance which covers specific events and has a claim rate of 99%, home insurance often covers a number of differing circumstances. But it may also not cover damage from pets, to fences and boiler repair, which may come as a surprise to some.

Prioritising price, rushing through the application or even not reading the policy documents thoroughly when policies are taken out or renewed, can leave policyholders without the level of cover they thought they had.

Get to know the policy…

The ABI are using these statistics to raise awareness among consumers about purchasing home insurance and to help improve transparency and build trust. But it is still a complicated area. That is why talking your client through the options is important to ensure they have the right sort of cover for their circumstances.

If you would like to know more about how to join our award-winning Mortgage Network as an appointed representative or becoming a member of our Mortgage Club, call our Broker Support Team on 0845 130 7446, option 1.