We are seeing a surprising number of insurance claims coming our way as insurers decline cover outright or reject specific claims.
This afflicts businesses and private individuals alike and we have recently advised on a number of household and jewellery claims as well as other insurance-related issues.
Insurers quibbling over claims may in itself be nothing new, but the volume of these issues seems to have increased recently and is perhaps a sign of the times. BP’s Deepwater Horizon oil spill is thought to have been largely self-insured but 2010 was still the seventh most expensive year for global insurers since 1970, mainly due to natural disasters such as earthquakes. In the UK alone the very cold snap before Christmas will have given rise to large numbers of household and motor claims, and the inevitably huge losses from the Japanese earthquake and tsunami will impact UK insurance groups, since they bear a share of these losses through the London reinsurance market. As insurers’ profits are squeezed this may increase pressure to question claims.
When insurance is placed the insured must provide insurers with all material information; this duty of good faith resurrects when a claim is made. This area of English law is heavily biased towards insurers, but that does not allow them to ride roughshod over the insured’s rights and withdraw without justification from the insurance bargain they agreed. Nor are insurers entitled to ignore the ‘Insurance: Conduct of Business Sourcebook’ published by the Financial Services Authority which attempts to redress the balance of fairness between insurance companies and consumers when it comes to insurance coverage and claims.
It is not necessary always to go to court to resolve disputes. The Financial Ombudsman has jurisdiction and that service is free, although our experience is that this route may not resolve the claim any quicker than court proceedings. Alternatives such as mediation are always available too.
If you are in any doubt about how best to respond to queries from loss adjusters or insurance companies then please do not hesitate to get in touch. A well-worded letter setting out why the policy is valid, and how the losses fall within the policy, might result in insurers swiftly changing their mind about paying a claim.
For more information or advice on insurance disputes, please contact
Susan Hopcraft.
