Why Insurance Claims Get Refused (and How to Overcome Excuses)

The Consumer Association’s Which? recently launched a “Super Complaint” against the FCA who are the insurance regulator in the UK. The essence of the complaint was that the regulator is not doing enough to police and discipline poor-performing insurers in the UK. Their complaint reveals that 30% of home insurance claims and 20% of travel claims are refused.

If you look behind the scenes, there are a number of tricks that insurers use to get out of paying claims. In this guide, we’ll take a look at what some of these are – and how you can hold your own.

The Top 5 Insurer Excuses (and How to Tackle Them)

1. “You Did Not Tell Us Something Important”

When you buy or renew a policy, your insurer will rely on what you told them about your circumstances to work out what premium to charge and what policy terms should apply. Many people assume that it won't matter if you give inaccurate information. This is a big mistake.

Because what your insurer asks you is the basis of their offer to sell you their cover, it means that if you give inaccurate information, they are likely to be allowed to “avoid” your policy, effectively cancelling it from the day it stated.

Most people can appreciate this. What comes as a massive shock, however, is that this rule applies even if there is no visible connection between the information you failed to provide and your claim. So for example, if upon purchasing your policy, you told your insurer that you had a burglar alarm even when you in fact did not, and then your home burned down for whatever reason, your claim could still be refused and your policy “avoided” based on that sole claim.

Fortunately, there are some restrictions in place that prevent your insurer from being allowed to do this:

1. Firstly, in a consumer insurance policy, you only need to take “reasonable care” to give accurate information;

2. Secondly, your insurer cannot generally avoid your cover unless they can show they would not have insured you at all if they had the accurate information beforehand.

2. “You Are Under-Insured”

This problem only arises if you buy a policy where you set how much you are covered for, that is you set the sum insured (rather than it being a pre-formulated amount).

If you do this and you declare a figure which is lower than what it should have been to represent the correct value of what is insured, then your insurer can reduce any claim you make relating to that sum insured by a proportional amount. So, for example, if you insured your home for a rebuilding cost of £250k when it would have cost £500k, then if you have a claim of £10k, your insurer need only pay 50% of your claim, which is £5k.

However, there are restrictions to what is expected from you because, unless your trade involves providing valuations of the type you are being accused of under-insuring, then you will only be required to make a reasonable effort in valuing something. Also, your insurer can only rely on under-insurance if they include a clause about it in your policy documents.

3. “Your Claim Was Not Caused By an Insured Peril”

The obligation on showing your claim was caused by a risk that is covered under the policy falls upon you (and not your insurer to disprove it) – for example that your claim was caused by a leak. If you can do this then your insurer will often say that, even though the risk may be covered, the actual cause of the claim was something that falls within one of the exclusions.

In this case, it could mean that the leak was caused by normal wear and tear. If they do this, however, then it falls on them to prove that the exclusion was the cause of your claim.

4. “You Failed to Do What the Policy Required”

Your policy will contain a number of obligations requiring you to do something or refrain from doing it before you can make a claim. The problems usually rise when your insurer tries to rely on the breach of something that has no connection to your claim. An example of such a thing would be if you fail to keep your fire alarm inspected every couple of years, but your home was damaged by a storm.

Most insurers will argue that they can refuse a claim even in the event of an administrative breach, however the rules say that an insurer cannot rely on the breach of an obligation under a policy, unless it is reasonable. Therefore, it will surely not be reasonable if the breach is entirely unconnected to the claim. So, in the fire alarm example, a storm claim will still have to be paid out to the agreed-upon amount.

5. “Your Claim Occurred Before the Policy Started”

For you to be able to file a claim under a policy, you will need to show that the event you are claiming for only started to happen after the policy was already underway (and before it had ended). Sometimes, this is not clear because the problem may be hidden from view or you may otherwise be unaware of it. For example, a leaking pipe hidden from view or medical problems with you or a beloved pet don’t always manifest themselves at the right time – but there’s a silver lining here as well.

Generally, in consumer insurance the relevant date when something starts to happen will be taken as the date that you first became aware of it, or should have reasonably become aware of it. If it’s a medical issue, then minor symptoms will not usually be enough for you to reasonably be aware of it, especially in cases where you did not know that something may be seriously wrong.

What to Do if You Have a Dispute

In any insurance claim dispute, you first need to break your case down into two distinct parts. The first part is to get your arguments clearly thought through and articulated in writing, with any evidence in support of your arguments. Once this is done, the second part is to decide who to make those arguments to. This will need to be someone who has the authority to override the refusal if they agree with your arguments.

See our article on how to dispute a rejected insurance claim to find out how to make a complaint and whether to use the Financial Ombudsman Service of the Courts if your insurer refuses to listen.

How SmarterClaims Can Help

If your insurer has refused all or part of your claim, SmarterClaims can help you understand why and build a structured challenge. We’ve catalogued the common excuses insurers use to refuse claims and matched them against the laws and rules that may help you challenge their decision.

Simply drag and drop your insurer’s refusal letter and your policy documents into our portal. Our AI will review them, explain which arguments may apply to your circumstances and show you how to present those arguments effectively. It will also draft a structured letter for you to send to your insurer, with links to the relevant laws and rules that support your position.

You can then use the letter to challenge the refusal yourself. We’ll also provide a step-by-step guide explaining what to do, in what order, and who to approach if your insurer does not change its decision. The service is available for a small fixed fee, which we’ll refund if you’re not entirely happy with what we provide.

Disclaimer: Smarterclaims is not a law firm or a claims management company and we don’t give advice. We are a digital tool for UK consumer insurance disputes. Using Artificial intelligence, we publish legal information and write letters that you can send yourself to help you overcome an insurance claim refusal. Our database of know-how contains 40 years of expertise drawn from inside both the insurance and legal industry to ensure its high accuracy.

Final Thoughts

When an insurer gives you a reason for refusing your claim, the explanation can sound definitive. But whether that reason actually allows them to reject the claim will depend on the wording of your policy, the circumstances of the loss, the evidence available, and the rules that apply to the particular excuse they are relying on.

The strongest starting point is to identify exactly why the claim has been refused and then examine that reason carefully. Whether the issue is non-disclosure, under-insurance, an exclusion, a breach of a policy condition, or an allegation that the loss began before cover started, there may be limits on when and how your insurer can rely on it.

You should therefore compare the insurer’s explanation with the relevant policy wording, gather evidence that supports your position, and challenge any assumptions or conclusions that do not properly fit the facts of your claim.

The important thing is not to assume that just because your insurer has identified a reason for refusing payment, that this reason must automatically be valid. Instead, spend time to understand the excuse being used, check whether the insurer is entitled to rely on it in your circumstances, and respond with a clear and evidence-based argument if you believe they have got it wrong.