One fifth of claims under home insurance policies are unsuccessful. Here, we reveal reveal why this is the case and explain how buyers can avoid being duped either on price or quality of cover.
Claims on home insurance policies are successful 79 per cent of the time according to figures from the Association of British Insurers.
By comparison, only one per cent of car insurance claims are turned down – a success rate for motorists of 99 per cent. The success rate for people claiming on travel insurance is 87 per cent.
A rejection rate of 21 per cent is high for an insurance product designed to protect your home and possessions. It means some policies are inadequate or that customers do not understand the level of cover they have – or a mix of both.
Insurers say it is common for customers to claim for general wear and tear of items or damage caused by lack of maintenance, which are not insurable.
It is the responsibility of homeowners to maintain their property and replace old creaking mechanical appliances.
People also often put in a claim for a value that is less than the policy excess – the contribution a policyholder must pay towards a claim. Sometimes, they do not have the right cover in place for what they want repaired or replaced.
For example, to receive a payout for damage that is a result of a mishap at home you need ‘accidental damage’, which is an optional extra when you buy a policy.
‘I CLAIMED FOR WEDDING RING, LOST ON HONEYMOON’
Bride and groom: Stephanie and Matt Cragg
Prison officer Matt Cragg has words of advice for grooms tying the knot: mind your wandering wedding ring.
Matt and wife Stephanie, both in their early 30s and with a one-year-old son called Oliver, have notched up more than three years of marriage.
But it took Matt just three days to lose his wedding band – worth £350 – back when they were on honeymoon in a romantic seaside resort in Mexico.
He says: ‘I probably lost it when I went for a swim. When I told a staff member he said it is quite common. I suppose new husbands aren’t used to wearing a ring.
‘The next day I saw a guy at our resort wearing a snorkel and swimming around looking for his own lost wedding ring. He was one of three I met during the holiday who had each lost a ring.’
Matt never found his wedding band so on his return home to Gosport, Hampshire, he claimed on his home insurance with Policy Expert. He adds: ‘I didn’t know for sure that it was covered until I claimed.’
Romantics popping the question with a diamond engagement ring, or couples who have bought valuable wedding rings, should let their insurers know.
These items will probably need to be listed separately on the policy.
Adam Powell, of Policy Expert, says: ‘If you are not used to wearing an engagement or wedding ring, it can be easy to misplace it. Make sure you have it covered by your insurance.’
Lindsey Rix, of insurer Aviva, says: ‘Customer attitudes are changing. More people are keen to cover items such as phones and tablets, as well as ensuring cover is in place for major perils such as fire or flooding. These gadgets are normally protected under “accidental damage” insurance.
‘So, if someone wants to claim for a smashed phone or paint spilt on a carpet, but they do not have accidental damage cover in place, they will be disappointed by the outcome.’
If you apply for a mortgage your lender will insist you have at least buildings insurance. This covers the structure and permanent fixtures and fittings. Without it, you would need to foot the bill if your home was damaged by floods, a fire, storm, vandalism, a fallen tree or escape of water.
Contents insurance covers possessions in the home and is essential for both tenants and homeowners.
While contents cover may seem less important than buildings insurance, few people could afford to repurchase every item that made their house a home – furnishings, artwork, jewellery and clothes.
The average home contents insurance payout of £2,520 is nearly nine times the average annual cost of combined buildings and contents cover at £290.
The average expected payout for each domestic flood claim following recent bad weather is £50,000 – 172 years’ worth of paying the average premium.
Adam Powell, head of operations at insurance provider Policy Expert, says: ‘Most standard home insurance policies only include cover for inside the home.
‘They often exclude gardens and outbuildings, so check you have “away from home” cover and that you have declared any valuables – such as expensive jewellery – that may need to be recorded as a specified item.’
Home emergency cover for boiler breakdowns, central heating failure and plumbing disasters is also bolt-on cover you can buy – it does not come as a standard feature of a policy.
Damian Reilly, head of home insurance at switching website comparethemarket, says: ‘You can also add on other complementary cover such as legal protection, key cover and gadget cover.’
He adds: ‘If you have made significant changes to your property or added to your possessions, let your insurer know. If you don’t, you are in danger of being underinsured. ‘Equally you need to take care to answer questions correctly. Failure to do so could result in a claim being turned down.’
A broker will search the market on your behalf and find a policy not only competitive on price but which is comprehensive and likely to meet your needs. Use the British Insurance Brokers’ Association’s ‘Find a Broker’ service by calling 0370 950 1790 or visiting biba.org.uk.
When comparing online, check the excess you will need to pay if making a claim and what optional extras are included. Do not opt on impulse for the cheapest policy.
For a guide to the quality of individual policies, check out the star ratings applied by financial research company Defaqto at defaqto.com/star-ratings.
For more information, see http://www.thisismoney.co.uk/money/bills/article-1583906/Home-insurance.html