Frequently Asked Questions (FAQ)

Saturday, January 03, 2009

This information applies to England, Wales, Scotland and Northern Ireland

What is insurance

You buy insurance in order to protect, or 'cover' yourself against unexpected financial loss which can result, for example, from personal injury, illness, or damage to your property or personal possessions. Some of the most common types of insurance cover are:-

• motor insurance
  
• household contents insurance
  
• buildings insurance
  
• travel insurance
  
• private health insurance
  
• life insurance (often called life assurance)
  

For more information about household contents insurance in England and Wales, see Household contents insurance

For more information about buildings insurance in England and Wales, see Buildings insurance

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Where can you buy insurance

You can buy insurance:-

• direct from an insurer
  
• through an insurance agent. An insurance agent is usually employed by one insurer
  
• through an insurance broker or independent intermediary. An insurance broker or intermediary is not usually tied to any one particular insurer, but will receive commission for selling you an insurance policy. It is sometimes quicker and easier to go to an intermediary than directly to an insurer, and they are useful if you want insurance for something special
  
• through a bank, building society, solicitor, travel agent, mail order agent or accountant.
  

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Buying insurance

The application

When you buy insurance you will usually have to complete an application. This is known as a 'proposal form' if you complete it face-to-face, or as a 'statement of facts' if you complete it over the phone or on the internet.

You must answer the insurer's questions, or those of the person selling you insurance, truthfully. You must disclose any information which may affect their decision to insure you, and how much to charge for the insurance. This is very important as your insurer may refuse to pay out on a future claim if you withhold information.

Check all the information in your proposal form, or statement of facts, very carefully before you sign it, to make sure that it is correct. This is especially important if a broker or agent has filled it in on your behalf, or the transaction was made over the phone or on the internet. You have a right to have a copy of your application.

The insurance policy

Your insurance policy contains the terms of your contract with your insurer. This will include what is known as a 'schedule'. The schedule has your personal details on it, and the particulars of your specific policy. You have the right to a full copy of your policy. It is important to make sure that the information in your policy is correct, and you should check it very carefully as soon as you receive it.

If you have not received your written policy details one month after starting making payments, get in touch with your insurer and ask them to send you your documents.

The amount you pay for an insurance policy is called a 'premium'. Premiums can either be paid to your insurer in one lump sum, or in instalments.

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Discrimination and insurance

If you experience difficulty in getting insurance cover, it may be because of racial, sexual, or disability discrimination.

If you think that you have been refused insurance cover because of your race, sex or disability, you should consult an experienced adviser, for example, at a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB .

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Claiming on your insurance policy

If you want to make a claim on your insurance policy, do this without delay, and follow the procedure set out in your policy document.

The Association of British Insurers (ABI) and the General Insurance Standards Council (GISC) have published Codes of Practice, which set out how insurance claims should be handled. The Codes cover all of their members. You can find more information about the codes at www.abi.org.uk , and at www.gisc.co.uk .

You do not have to make a claim on your insurance policy, even if you are entitled to do so. However, you should think very carefully about this decision as any costs which you have to pay yourself may turn out to be more expensive than you think. It is always advisable to make an insurance claim if someone has been injured. Personal injuries can be expensive, and they can have an unexpected and long-term affects on your health.

Even if you do not wish to make a claim on your insurance policy, you must always tell your insurer about an event. If you do not report it, you may find that this leads to problems later on when you do wish to make a claim.

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Problems in claiming on your insurance policy

Your insurer will not pay out the full amount

Your insurer may agree to pay your claim, but not the full amount. This may be because:-

• you have under-estimated the total value of your possessions when you took out a household contents insurance policy and do not have enough insurance to cover your losses
  
• your insurer thinks that you have put an unrealistic value on the contents of your house, and will only pay you part of the claim
  
• unless you have a 'new for old' policy, the item for which you are claiming was old, and your insurer will pay you less than the cost of replacing it with a new item. This is because you have already had some use from it.
  

If you think your insurer is being unreasonable, you can try to negotiate. If you are still not satisfied with the way your claim has been dealt with make a complaint. For more information about how to make a complaint about an insurance claim, see under heading How to resolve an insurance problem .

Your insurer refuses to pay your claim

Your insurer may refuse to pay your claim because:-

• the incident you are claiming for is not covered by your policy (see heading Uninsured losses)
  
• you have failed to pay some of the instalments of your premium
  
• you failed to notify your insurer of a change in your circumstances
  
• you have not followed the claims procedure of your policy correctly
  
• you have not kept to a condition of your policy.
  

Your insurer must give you a reason for refusing to pay your claim, and you should check the details of your policy carefully to make sure that their decision is a reasonable one. For more information about how to deal with an insurance problem, see under heading How to resolve an insurance problem .

Uninsured losses

Sometimes an incident can result in expenses that your insurance policy does not cover. These are called uninsured losses.

If your insurance policy includes an 'excess', this is also a type of uninsured loss. An excess is the fixed amount of any claim, for example the first £50, that you must pay yourself.

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Cancelling your insurance policy

You may want to cancel an insurance policy if you have just bought it and have changed your mind. You have a right to do this if you bought your policy over the phone, on the internet, or from someone who called at your home or place of work. You may also have a right to cancel your insurance policy if you paid for it by a credit agreement which you signed in your own home, or anywhere other than the offices of the credit company.

You may also want to cancel your insurance policy because your circumstances have changed. You should check the details of your insurance policy to see if you have a right to cancel, and if any refund is due.

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Your insurer has disappeared

If you want to trace an insurer, intermediary, or broker, contact the Financial Services Authority (FSA) at: www.fsa.gov.uk , the General Insurance Council (GIC) at: www.gisc.co.uk ; or the Association of British Insurers (ABI) at: www.abi.org.uk .

If your claim has not been settled because your insurer has gone out of business, you may be able to get help from the Financial Services Compensation scheme. Details of this scheme are at: www.fscs.org.uk . If your insurer is a member of Lloyds, you should contact the complaints department at Lloyds on 020 7327 5693.

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How to resolve an insurance problem

If you have a problem with your insurance policy, or an insurance claim, write to your insurer, giving details of your complaint, and how you would like it resolved. If you are not satisfied with your insurer's response, make a formal complaint, using their official complaints procedure. If you are still not satisfied with the outcome of the formal complaints procedure, consider taking the complaint further.

If you bought your insurance policy from an insurer which is authorized by the Financial Services Authority (FSA), complain to the Financial Ombudsman Service (FOS). This is a free service available to policyholders who have already followed their insurer's complaints procedure. The FOS will try to resolve the complaint through mediation. If the dispute cannot be resolved this way, the FOS will begin a formal investigation. The final decision given at the end of this investigation is binding on your insurer, but if you do not agree with it, you are free to take your insurer to court. To find out whether the FOS can investigate your complaint, you contact them on 0845 080 1800, or visit their website at www.financial-ombudsman.org.uk .

If your insurer is a member of Lloyds, contact Lloyd's Complaints Department on 020 7327 5693. If you are not satisfied with the outcome of this complaint, you can then go on to complain to the FOS.

If your insurer is not authorized by the FSA, and is not a member of Lloyds, but has chosen to be covered by the Financial Ombudsman Service, complain to the FOS. To find out if your insurer is covered by the FOS, call them on 0845 080 1800.

If your insurer is not authorized by the Financial Services Authority, but is a member of the General Insurance Standards Council (GISC), you should complain to the GISC. You can phone them on 0845 601 2857.

If you bought your insurance policy from a member of the Association of British Insurers (ABI), they can advise you about where to make your complaint, and may even be able to pass your complaint on. However, they are not able to negotiate with your insurer on your behalf.

If you have tried all the options for resolving your complaint through the complaints procedures, but have not met with success, or if your insurer is based outside the UK, you may wish to consider taking legal action. However, you should only consider going to court as a last resort. This is because the amount of compensation a court may award you could be reduced if you have not tried other ways of resolving the problem before taking legal action.

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