Fifth of home insurance claims ‘fail’ says industry

People paid for lack of maintenance, accident and lack of cover.
People paid for lack of maintenance, accident and lack of cover.
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Around one in every five home insurance claims made by consumers is turned down – while just one in every 100 motor insurance claims is unsuccessful, new industry figures reveal.

The Association of British Insurers (ABI) has published payout rates for the most common insurance claims made during 2013 and 2014, in a bid to improve transparency and build customer trust.

They show that 99 per cent of private motor insurance claims were successful, with the average payout being £2,160.

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Around four in five (79 per cent) policyholders who made a claim under their home insurance were successful and received a payout, with the average figure being £2,520.

Meanwhile, nearly nine in ten (87 per cent) of travel insurance claims were paid, with an average payout of £884.

The analysis covers 6.9 million claims handled by 19 insurers. It marks the first time the ABI has released data in this way, showing the success rates when customers have made a claim under motor, home and travel insurance – the three most popular types of general insurance held by UK households.

The figures were compiled to help customers understand what they are covered for – and why a claim might be rejected.

Common reasons for home insurance claims failing include claims being made for “normal wear and tear” or for damage caused by a lack of maintenance which was not insurable; the value of the claim being less than the policy excess; or that the customer had not bought the right kind of cover, the ABI said.

An example of not having the right kind of cover would be someone not having accidental damage cover, which is often an added extra.

With travel insurance, claims were often turned down because the policyholder lacked evidence to back up claims for items which had been lost, or they failed to tell their insurer about a pre-existing medical condition.

In other cases, the travel insurance claim came to less than the policy excess or a claim was made for a holiday cancellation which fell out of the scope of the cover. Explaining the high success rate for motor insurance claims, a spokesman for the ABI said that such products tend to be quite similar in what they cover, whereas with home insurance, for example, people could be covered for a wide variety of events.

There is also a diverse range of “add ons” such as legal expenses cover or emergency assistance for a boiler breaking down.

Huw Evans, ABI’s director general, said: “Contrary to popular belief, insurers want to pay honest claims. It helps nobody when customers have bought the wrong product or have not disclosed important information.”