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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 motor insurance in England and Wales, see Motor insurance in Consumer fact sheets.
For more information about household contents insurance in England and Wales, see Household contents insurance in Consumer fact sheets.
For more information about buildings insurance in England and Wales, see Buildings insurance in Consumer fact sheets.
For more information about travel insurance in England and Wales, see Travel insurance in Consumer fact sheets.
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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.
Information you must be given by insurance providers
Insurance firms and brokers selling most types of insurance must give you details about the service they are offering, and a summary document which contains certain key facts about the insurance policy they want to sell you. The summary document should display a 'Keyfacts' logo, and must tell you, amongst other things, details of the insurer, the main features and benefits of the insurance, any significant or unusual exclusions in the policy, how long the cover will last and whether you have any cancellation rights. This information will make it easier, when choosing insurance, to compare policies from a number of firms.
Traders selling travel insurance sold as part of a package holiday, and those selling extended warranties for electrical items do not have to give you this information.
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 discrimination because of your race, sex, disability, sexuality, religion or belief.
For more information about sex discrimination, see Taking action about sex discrimination.
For more information about race discrimination, see Taking action about race discrimination.
For more information about disability discrimination, see Disability discrimination.
In England, Wales and Scotland, for more information about discrimination because of your sexuality, see Discrimination because of sexuality.
In England, Wales and Scotland, for more information about discrimination because of your religion or belief, see Discrimination because of religion or belief.
If you think that you have been refused insurance cover because of your race, sex, disability, sexuality, religion or belief, 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 e-mail, 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.
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.
For more information about household contents insurance in England and Wales, see Household contents insurance in Consumer fact sheets.
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 under 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.
If you suffer a financial loss for which you are not insured, in a situation which is someone else's fault, you may be able to take them to court to recover your expenses. Your local Citizens Advice Bureau can give you advice about what action you can take in this situation. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.
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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. If you bought your policy under circumstances other than these, you should still check the terms of the policy to see if you can cancel it. Many general insurance policies give you an automatic right to cancel within 14 days of purchase, and many life insurance policies give you the right to cancel within 30 days. Your insurer is allowed to make a small charge for the administration costs of cancellation, but they are not allowed to make a profit from this charge.
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.
For more information about your right to cancel an insurance agreement, see Buying services - your rights.
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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.moneymadeclear.fsa.gov.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.
All insurers must be covered by the rules of the financial watchdog, the Financial Services Authority (FSA). This means that if you have a complaint about an insurer, you can take it to the Financial Ombudsman Service. This is a free service available to policyholders who have already followed their insurer's complaints procedure. The Financial Ombudsman Service will try to resolve the complaint through mediation. If the dispute cannot be resolved this way, the Financial Ombudsman Service 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. For more information about the Financial Ombudsman Service, you can visit their website at www.financial-ombudsman.org.uk, or phone them on 0845 080 1800.
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 Financial Ombudsman Service.
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.
For more information about alternatives to taking court action in England and Wales, see Alternative dispute resolution in Consumer fact sheets. In Scotland, see Alternative Dispute Resolution in Consumer fact sheets.
If you would like help in dealing with a complaint against an insurer, 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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