One in five (79%) home insurance policyholders who make a claim is turned down, new figures from the Association of British Insurers have revealed that
According to the ABI, the average pay-out is £2,520, compared to the current average combined buildings and contents annual premium of £290.
The main reasons for a claim failing were wear and tear or damage caused by a lack of maintenance which are not insurable; the claim value being below the policy excess; and not having bought the right cover, such as accidental damage, which is often an added extra.
Nearly nine in ten (87%) of customers claiming on their travel insurance received a pay-out on average £884.
Declined claims were mainly due to cancellation falling outside of the scope of cover; failure to declare a pre-existing medical condition that led to a claim; no substantiation for the loss of items; and the claim being below the policy excess.
For motor insurance, 99% of claims were successful, with an average pay-out of £2,160.
The analysis was carried out to help identify where customers may need more help to understand what they are covered for, and reduce the level of declined claims.
The analysis covered 6.9 million claims handled by 19 insurers.
Huw Evans, ABI’s director general, said: “As insurers, we want our customers to have greater trust in us to pay claims when life gets difficult. We cannot earn that trust without being more transparent about how many claims are paid and why a minority of claims are usually declined. That is why the figures we are publishing today are so important.
“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. So we will use the analysis we are publishing today to drive awareness campaigns to improve even further the acceptance rates for home and travel. Buying insurance should never just be about getting the cheapest price in the quickest time possible, it should be about ensuring you have the right product for your hour of need.”
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