Car insurance claim rejected? Here's why and what you can do
If your car insurance claim has been turned down, you're not alone. Around 5% of car insurance claims are rejected, flat out or partially.
There are a whole host of reasons for this.
But there are also some biggies.
If you find your car insurance claim has been turned down by your car insurance company, the first thing to do is to find out the broad reason.
After that, you may be able to challenge it.
Here are some of the commonest.
1. The information you gave your insurers is incomplete or wrong.
A recent courts case established that, even if a policy holder had lied to an insurance company, that was not in itself a cause to turn down a claim. The material fact they lied about (which is deliberate concealment, not just a misunderstanding), had to be relevant to the claim.
While this gives policy holders more protection against a claim being turned down when they make nothing more than an innocent mistake, it’s probably not a great idea to rely on this court ruling when it comes to your own claim.
Generally speaking, whether something is relevant can be argued about. You might well lose this discussion against a big organization like an insurance company.
So, make sure you let your insurer know all about your driving history and your car. If it has modifications, tell the insurer. The same goes, rather obviously, for convictions over the last five years as well as any claims or accidents (even if they were tiny and weren’t your fault.
If you drive 50,000 miles a year, don’t try and get the premium down by claiming you do 5,000.
Alternatively, they might have reason to believe you are not being entirely honest or accurate about what happened.
But, certainly, if you're turned down because you didn’t disclose certain facts even though you weren’t asked specifically about them, you should take this up with your insurer, if you think this is unreasonable.
New rules say that, so long as you answered all questions honestly and in good faith, not telling the insurer about something you were asked about is not a sufficient reason for rejecting your claim.
2. Small print
You may easily be caught out by a clause in the small print in your policy you didn’t know about.
There’s no excuse for this – you simply have to read the terms and conditions and, if there is anything that isn’t clear or seems confusing, make sure you clarify. This way you won’t get any nasty shocks when you make a claim.
3. Type of use
This is a common reason for rejection: you declare you only use the car for social and domestic and then have a prang on your way to work. An insurance company will be very likely to spot this. And they may well reject your claim as a result.
What to do if your claim is rejected.
The first thing to do is to take the matter up with your insurer and do it in writing
Provide all your policy information and details of the claim. Outline, as you understand it, why your claim has been rejected.
Then explain why this is wrong or unfair with any evidence that is relevant.
Keep what you write to the point, factual and unemotional.
Explain what you believe the company should now do as a result of your letter and evidence.
Let the company know that if matters can’t be resolved satisfactorily, you will take them further.
If your appeal is rejected and you believe you are still in the right, take up your case with the Financial Ombudsman Service.
You are only able to do this once you have exhausted the complaints process with your insurance company. You’ll need a “final response” from them, or eight weeks must have gone by since you raised the complaint and you have not received a response.
The Financial Ombudsman Service is independent and offers a free service that examines complaints.
If they conclude you are in the right, the ombudsman has the power to order the insurance company to explain why they have rejected your claim, force them to apologise, and, most importantly, pay compensation and meet the claim.
The ombudsman’s decision is final as far as the insurance company is concerned, but, if you are still unhappy, you still have the right to take the company to court.
When did you last switch your car insurance provider?
Last year 65% of customers didn't switch their car insurance to try and get a better deal.