Common reasons business insurance companies might not pay a claim
Can insurance companies refuse to pay?
In short, yes. While uncommon, an insurer can refuse to pay your claim, however, the decision must be reasonable.
To make sure you're aware of what these reasons are, it's worth checking your policy so you fully understand your responsibilities when it comes to making a claim and why the insurer might have a reasonable right to refuse.
Why are some claims not paid?
You don’t have the right cover
This is one of the most common reasons why claims aren't paid. There's nothing more frustrating than making a claim, only to discover that you're not covered for that particular incident.
This is why it's so important to research exactly what cover you require and get the right level of cover. For instance, opting for £5 million of public liability cover, instead of £2 million.
Our tailored insurance allows you to customise your cover so that you're fully protected but only paying for the cover need. If your circumstances change, such as your turnover changes or you hire more people, you can easily update your details and adjust your level of cover through your online account for no extra cost.
If you're unsure of what cover you need for your business, our quote builder guides you through the most appropriate covers for the work you do. If you still have questions, our customer success team are on hand to talk about your options via the web chat below, email or by phone on 0333 772 0759+31 10 8080 889.
You didn't follow the claims process
Most insurers have a claims process and the details of this will differ between insurers.
Depending on the claim, you might be asked to follow a certain procedure for your claim to be successful. This could include the time frame with which to make a claim, who to contact and recommendations of how to act.
You admitted fault
As well as a claims process, your policy will specify how you should act in the event of a claim. This process should include a point about not admitting the incident was your fault.
If you do admit fault, there's a danger that this foregoes the process your insurance contract states and may lead to the claim being rejected.
The claim is made out of the time frame
When it comes to making a claim, timing is key. To understand whether the claim you're trying to make will be valid, you have to first understand if your policy is based on 'claims made’ or 'claims occurring’.
Claims made policies will only cover claims that both happen and were reported within the policy period. So, if an incident occurs within the policy period and the claim was made after the policy period ended, this wouldn't be covered on a claims made policy.
Claims occurring policies cover claims that happened within the policy period and may be claimed upon after the end of this period. So, if an incident happened within the policy period and the claim was made after the policy period ended, this would be covered by a claims occuring policy.
You can read more about the difference between the two in our guide to claims made insurance.
The insurer was unaware of certain responsibilities you have
Omissions and inaccuracies are another big reason why claims aren't paid. This occurs if you haven't given the insurer all the necessary or correct details when getting a policy.
For instance, if you’ve told us that you’re a building contractor, but you have omitted that you also occasionally work as an electrician sometimes, we might not be able to process a claim if it relates to the electrical work you do.
To combat this, you should aim to answer all questions asked by your insurer as accurately as possible and mention any relevant updates as soon as possible.
There was an exclusion for the claim you’re making
While we'd like to cover everything, there are some things that are considered too high risk that we can't cover and are therefore excluded.
For example, you’ve got insurance for your shop, but the claim involves an injury arising from a 3-litre deep fat fryer. This is an exclusion in our policy so you wouldn’t be covered.
These exclusions should be clearly stated in your policy, so it's worth having a read and noting what they are so you can avoid getting caught out.
The claim doesn’t meet what’s covered on your policy
Similar to not getting the right level of cover, there are instances where the details of the claim itself aren't covered by your insurance.
For instance, if you’re claiming an item has been damaged, but it’s just suffered general wear and tear, this would not meet what's covered by your insurance and therefore might result in an unsuccessful claim.
You didn't take reasonable steps to prevent the claim
While accidents do happen, an insurer will consider if you've tried to minimise the likelihood of an accident and have taken steps to prevent a claim from arising.
In your policy, you should find this under a 'reasonable care' or 'duty of care' clause. Creating a risk management framework is a good way to assess the risks that could affect your business in order to reduce them.
There’s not enough evidence to support the claim
When making a claim, the insurer will most likely ask for some evidence that relates to the incident. This could be a police report for stolen goods or photographic evidence of property damage.
If you haven't gathered this evidence, or enough to prove the claim, it might not be successful.
Each policy has geographical limits. There may be some clauses in your policy that cover you for various locations, but if the incident happens outside the geographical limits of your policy, you might not be covered.
For more information about the claims process, check out our guides and posts or make a claim here.