Insurance traps - the devil is in the detail

The devil is in the detail.

That’s the message when dealing with insurers who use the dreaded small print in our contracts to get them off the hook when it comes time to cough up for a claim. 

Only one in five members of consumer group Which? say they understand the terms and conditions of their insurance policy 'very well.' 

Did you know, for example, that your house insurance may be void if you don’t turn on your house alarm at night or when you go out?

And if you change job you may need to tell your car insurer or risk losing cover?

These are just some of things that arise among hundreds of complaints to consumer watchdogs.

Here are some of the main ones to watch out for.

Wear and tear

Insurers will only pay up for damage to your car or home if they are properly cared for.

“Disputes over wear and tear claims came up more than any other in our research,” reports Which? magazine. 

“Wear and tear exclusions apply to both car and home insurance. The best way to avoid a claim being rejected is to carry out regular maintenance checks, such as keeping your car's water and oil levels topped up, and checking the windows and roof of your home are in good condition – especially in the colder months,” Which? advises.

Follow the rules

If you are any way in breach of legislation or regulations, you may not be insured.

For example, try calling for a roadside repair truck under your car insurance if your NCT is out of date. They won’t come because your insurance is void once your car is seen as not up to scratch under the law – and insurance firms have your NCT records online.

The same applies to house insurance. The Financial Services and Pensions Ombudsman published the case of Sean and Jenny who owned a house hit by significant storm damage.

They lodged a claim with their insurer for the cost of repairs. But they were refused because the extension was not of standard construction and was built with non-compliant materials.

They complained to the Ombudsman, who rejected their complaint.

Water damage

Do you know that you’re supposed to turn off the water at the mains if your house is unoccupied?

If you don’t, this can negate your insurance policy, as shown another  ‘case study’ reported by the Ombudsman.

A couple - Aggi and Nowak – had a holiday home hit by €57,000 worth of damage when water pipes burst after a cold spell while the house was unoccupied. 

Their insurance claim was rejected because the house was unoccupied, and they had not turned the water off in their absence as required by the terms of their policy. 

Aggi and Nowak argued that the house was not unoccupied for more than two days and they could prove it. However, they admitted not turning the water off at the mains. 

Before mediation through the FSPO the insurance company had paid €14,500 of the €57,000 claim. The insurance company agreed that its definition of “unoccupied” could have been clearer and that it has since changed the wording of its policy.

Aggi and Nowak agreed to accept a further contribution of €20,000 towards the claim.

But the couple were still left €22,500 out of pocket.

Value your valuables

Formula 1 racing cars heiress Tamara Ecclestone – daughter of Bernie - recently learnt the hard way about the small print in insurance policies when she had €30m worth of jewellery stolen in a burglary.

Her family couldn’t claim anything back because her policy had an ‘exemption clause’ for watches and jewellery.

Other claims are rejected due to lack of proof that the items were worth a lot of money – or even existed at all.

Having receipts will make it easier to settle a claim. But other evidence, such as photos and videos or bank or credit card statements confirming purchases are also acceptable.

If you have old family jewellery as heirlooms, it’s also worth getting them valued, which proves both their existence and worth.

Costly car cover misconceptions

Many drivers believe they only need to inform their insurer if they make a major modification to their car that impacts its performance, such as bigger wheels, tuning to the engine or adding a bodykit and huge rear spoiler.

However, even minor changes that don’t seem to make much difference to speed or safety can end up costing you dearly – such as adding a towbar, as one Mail reader found to their cost when a claim was refused over this issue.

 Other common ways to negate your car cover include:

Inadvertently – or intentionally - lying about:

• Where your car is parked,

• Whether it is used for business purposes

• What you do for a living (tell your insurer when changing jobs).

Don’t delay

If you’re too late to make a claim after an event has happened, even if your claim is valid, it could be turned down. 

Your policy document will typically tell you to let your insurer know ‘as soon as practical’.

There’s a balance to strike here, because it’s also worth taking the time to make sure you’ve got all the information needed to make a claim, and to weigh up whether it’s worth claiming in the first place.

Car stay cost Simona dearly

Simona Slapinskaite

Most people think that if their car is stolen, they’ll get back enough to buy a new one.

But not what happened to Simona Slapinskaite, a busy single mum who manages a creche by day and often works as an actress in the evenings with Lithuanian theatre group Alternatyva Alternatyvai. 

She needed her  car – a 2012 Hyundai valued at €5000 – to get around. So, she was devastated when it was stolen and burnt while she was away on holidays in her native Lithuania.

“Garda called me to say they found my car and put it in a recovery yard,” she said.

She assumed her insurance cover with AIG would pay for a new car. But she only got back little over half its value and was unable to afford a new one.

AIG offered only €3197 in full settlement of the claim for a car it accepted was worth €5000.

It deducted nearly €2k of that sum as follows:

• €750 for the excess on the policy – the part of any claim paid for by the customer

• €1053 for towing and stowage (the policy only covers a €300 maximum limit of the total bill of €1353)

Simona lost her 10-year no-claims bonus, which means paying thousands more for insurance over the coming years  - and her broker charged €350 to cancel the policy.

To rub salt in the financial wound, she also had to pay a €28 toll bill for the M50 racked up by the car thieves on their ‘joyride,’ which garda indicated to her would probably go unpunished due to the age of the drivers.

All in all, she only got back €2900 for a car worth €5000 and faces a much-increased insurance bill without her no claims bonus. So she hasn’t been able to afford a new car. 

“I have to do everything by myself. I'm a single mom. I have stress,” she says. “I pay for insurance I hope it will take care of it but I never imagined that it's €1353 for (a few days) car storage. I thought like maximum €500.”

Simona says she knows the boys who stole the car and then posted videos of their jaunt on social media. “They made some jokes about my car and burning it with some cigarettes. I'm feeling empty now. I'm feeling that it’s very unfair,” she says.

We put Ms Slapinskaite’s case to AIG’s claim’s assessor, who claimed that she could have averted some of the storage costs by recovering the car more quickly instead of waiting several days and he insisted that they informed her of this fact, although she does not recall this warning.

“I advised that if the vehicle was a total loss and AIG collected it from Gannons to stop further costs incurring that we would need to deduct the amounts above policy limits from the settlement amount  if vehicle was a total loss( limits attached to this policy for storage and recovery €300).

“I further explained, an alternative option would be for Miss Slapinskaite to deal directly with Gannons , as they( Gannons ) may at times reduce fees to customers not claiming directly from insurance policy.”

 At no point did AIG advise Miss Slapinskaite to keep the vehicle in Gannons , this is not the advice we would offer, it would be quite the opposite.” 

Ms Slapinskaite  was unsurprisingly disappointed with this response. She said: “It seems if I took my car away I wouldn’t have to pay (so much). Maybe I could have put it somewhere in some garage and later made a claim but this car was burned. I didn’t know what to do or where to put it.”