Your insurer refuses your claim when you don’t give relevant information
Insurance can protect you when things go wrong. When you decide to take out insurance there are things that your insurer needs to know so that they can work out what the risk is of insuring you and how much that will cost.
From 6 April 2013 your insurer must ask all relevant questions they need to know before you take out, renew or change a policy under the Consumer Insurance (Disclosure and Representations) Act 2012.
Before this date, you had to give any information to the insurer that may have affected their decision to insure you, whether or not the insurer asked all the relevant questions.
This page explains what your responsibilities were to disclose information to your insurer before 6 April 2013, to help with any disputes with insurance taken out, renewed or changed before 6 April 2013.
Applying for insurance
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. It's called a statement of facts if you complete it over the phone or online.
A proposal form may include a clause allowing the insurer to check databases such as the Claims and Underwriting Exchange database. This is a record of insurance claims. You are unlikely to get cover if you refuse to accept this clause.
You must answer the insurer's questions, or those of the person selling you insurance, truthfully. For example, if you are asked if you have ever been refused insurance you must give a truthful answer.
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 you bought the insurance over the phone or online. You have a right to have a copy of your application.
Disclosing material facts
Before 6 April 2013, you had to disclose any information which may have affected the insurer's decision to insure you, and how much to charge for the insurance. This information was known as a material fact.
It was very important to tell the insurer about material facts as your insurer may have refused to pay out on a future claim if you withheld this information. For example, if you took out home contents insurance you needed to tell the insurer if anyone in the household had convictions for theft or arson.
You did not have to report any convictions that were spent.
If you have an insurance claim refused because you didn’t disclosed a material fact, for a policy taken out renewed or changed before 6th April 2013, you can complain if you did not and could not reasonably have known that the fact was material.
Claims for life, critical illness, income protection and other long-term protection insurance policies
Before 6th April 2013, special guidance about claims for life, critical illness, income protection and other long-term protection insurance policies applied. The guidance, issued by the Association of British Insurers (ABI), said that if you didn’t tell the insurer about a material fact but you acted honestly and reasonably, they should pay your claim in full.
If you had been negligent and didn't take reasonable care when telling your insurer about material facts, you should have been put back to the same position as an identical customer who had accurately disclosed information at the time of their application for a policy. An example of not taking reasonable care is if you accidentally left out some crucial information or ticked the wrong box by mistake. If your application for a policy would have been approved despite the missing information, your claim might still be paid. But if the insurer would have turned your application down if they'd known about the missing information, your policy may be cancelled and all your premiums refunded to you.
If you deliberately didn’t disclose a material fact, or if you made no effort at all to give the insurer accurate information, your claim will be refused and the policy will be cancelled. Your premiums will normally be refunded to you but may be kept if there is clear evidence of fraud.
Changes in circumstances
If there was any change in your circumstances before 6th April 2013, you should have told your insurer immediately or as soon as you could. For example, if you moved house or changed your car, you should have told the insurer before this happened so that you were covered by your policy when the change took place.
You should have checked your policy to see what changes you had to report. If you didn't tell your insurer about any changes you had been asked to tell them and you later needed to make a claim, your insurer may refuse to settle it.
Other useful information
- To find out about the Financial Ombudsman’s approach to dealing with disputes about insurance at www.financial-ombudsman.org.uk
- Contact your local Citizens Advice bureau or Advice Direct Scotland's consumer service if you need more help.
Advice Direct Scotland's Consumer Service
Freephone: 0808 164 6000
Website: www.consumeradvice.scot