Some of the UK's biggest insurance companies are only paying out on around half of all claims, figures from the Financial Conduct Authority reveal.
One in four claims on average are rejected, but insurers argue the real figure is lower than this as customers do not understand what their insurance covers. By contrast around 99% of car insurance claims are accepted by insurers, according to FCA figures.
Insurance firms say that that the 23% figure of denied home insurance claims is more complicated than it first appears as they also include customers who contact their insurer to ask if something is covered under their insurance, but end up not claiming, a scenario known as 'claims walkout'.
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Home insurance is meant to protect both properties and possessions. This insurance is made up of two parts. First is buildings cover, which pays out if a physical property is damaged, and second is contents insurance, which covers the items inside it. Some of the UK's best-known insurance companies feature on the list of firms with the highest rejection rate, including AA and Lloyds. By contrast, some, such as Haven Insurance and Hiscox, pay out almost 100%.
The home insurers that pay out on the fewest claims are:
- Ageas Insurance (55-60% of claims settled)
- QIC Europe (55-60% of claims settled)
- Qmetric Group (55-60% of claims settled)
- AA Underwriting Insurance (60-65% of claims settled)
- Lloyds Bank General Insurance (60-65% of claims settled)
Home insurers that pay the most claims
- UK Insurance (95-100% of claims settled)
- Tokio Marine Kiln Syndicates (95-100% of claims settled)
- Hiscox Insurance Company (95-100% of claims settled)
- Haven Insurance Company (95-100% of claims settled)
- Greenwood Insurance (95-100% of claims settled)
Insurance experts say that claims walkout is a sign of a big problem in the insurance world, as a customer has had to contact an insurer to see if they are covered for something - but they should have known in the first place. James Daley, of campaign group Fairer Finance, said: "I think customers do not understand what they are buying. This is a perennial issue in home insurance, which can have 20,000 pages in a policy document."
A spokesman for AA Underwriting said: 'The AA Underwriting Insurance Company will always accept and pay claims where the customer is covered, and our acceptance levels aligns with larger home insurers. We do not believe that these figures provide a meaningful comparison for claims acceptance for several reasons, but predominantly because insurers appear to interpret the FCA definitions for claims acceptance differently.'
An Ageas spokesperson said the its data 'includes all calls even if a customer has contacted us to check whether they have cover, or called in error to talk about a policy they hold with another insurer. While this means our claims acceptance rates look low, we’re pleased to see that our ratio of complaints is at the lower end when compared to the market.'
A Lloyds Bank spokesperson said: "Around 10% of claims made by our home insurance customers in the second half of 2021 were declined. However, the FCA data also includes things like if a customer called us to ask whether something was covered by their insurance – like a TV that has stopped working – and were informed it was not, even if they didn’t make a claim. We’re confident our products deliver for our customers."
A Qmetric spokesperson said: "We are proud of the customer-focused service we deliver and carefully monitor satisfaction and renewal rates, which both compare well to industry averages, as well as acting on feedback to continually improve the customer experience."
Home insurance was created after the Great Fire of London in 1666. After the fire, London residents called for protection in case of another inferno. This led to brokers offering the first fire insurance, which was later expanded to cover more risks to property.
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