Take time buying cover online or risk becoming uninsurable

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Take time buying cover online or risk becoming uninsurable

Buying via a website is often cheaper and quicker but make sure you’re covered


Buying via a website is often cheaper and quicker but make sure you’re covered
Buying via a website is often cheaper and quicker but make sure you’re covered

The unfair way that some insurers cancel insurance policies – and then refuse to pay out for claims – was recently criticised by the State financial watchdog. Some insurers are cancelling insurance policies in an “unreasonable and disproportionate” way, warned the Financial Services and Pensions Ombudsman (FSPO), Ger Deering, in a recent report.

Consumers who buy their insurance online may be at greater risk of having their policies cancelled than those who buy insurance through other channels – because they may be more prone to making a mistake when applying for cover.

Online insurers often promise to provide quotes in a few minutes or clicks. Rushing into any purchase can be a mistake though – and this is particularly true of insurance.

“The rush to make it easy-to-buy insurance is something I’m concerned with,” said Deering.

The consequences of having your insurance cancelled can be very serious. So before buying insurance online, follow these four rules of thumb.

READ ASSUMPTIONS

When buying insurance online, you’re often asked to tick a box to confirm that you have read and accepted the insurer’s assumptions about you – and the item being insured. You usually need to click a separate weblink to read the assumptions.

“It’s very important to go in [to that weblink] and read those assumptions,” said Deering. “Don’t tick any box without reading what’s in the associated link and understanding what you’re ticking. It will be recorded that you’ve ticked the link.”

It is equally as important to read the terms and conditions of your insurance policy. Ensure too that you can meet – and are happy – with those conditions before agreeing to them.

Assumptions and conditions could be far more detailed than you expect. So you could easily find that you, or the item being insured, fall outside the scope of the insurer’s assumptions – or that you don’t meet the conditions of the policy.

For example, with car insurance, there will usually be assumptions made about the amount of years you have held an insurance policy for and not claimed on it (known as your no-claims bonus [NCB]) and about other aspects of your driving history (such as penalty points, and driving offences and convictions). The quote offered might also be based on the assumption that you have never had insurance refused – or cancelled – before, that you have no medical condition which impairs your ability to drive, that you have not modified your car in any way, and that the car is registered in your own name.

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With home insurance, the assumptions can cover anything from the age and condition of the property being insured, to the materials used to build the property, to whether or not the property is your own home or is rented out to tenants, to whether you’ve ever been declared bankrupt or convicted of an offence of any nature.

An insurer is very likely to turn down your claim if you tick a box to indicate that all of the assumptions which the policy is based on apply to you and the item being insured – if it later transpires that this is not the case. Even if an assumption has nothing to do with the claim being made, your insurer could still turn down your claim.

“People often underestimate the year of construction of their home,” said Jonathan Hehir, managing director of the online insurers, coverinaclick.ie. Hehir cited a case he came across where a home insurance customer believed his house was built in the 1930s – and informed his insurer of this construction date when buying his insurance. The customer was mistaken however – his house had been built in the late 1800s. “The customer’s house was broken into and the insurer said it wouldn’t pay the claim because of the misinformation provided [about the age of the house],” said Hehir.

ANSWER CORRECTLY

Don’t rush through an application form when applying for insurance. Take the time to read the form carefully, so that you fully understand the questions being asked and are therefore in a position to answer them correctly.

“Insurers won’t check that you’ve answered questions correctly at the point that you buy the policy,” said Deering. “But they will check whether or not you’ve answered questions correctly when you go to make a claim. It’s crucial that people know they’re entering into an important contract [when buying insurance online] and that they take time filling out questions.”

Answer a question incorrectly when applying for insurance and you run the risk of having a future claim turned down – or having your insurer cancel your policy. Deering urged people to email or call an insurer if they come across an unclear question on a form. “Don’t risk answering questions you are unclear of,” said Deering.

WATCH SUBTLETIES

Be aware of subtle differences in the words used in a question. For example, if applying for car insurance, are you being asked for how long you’ve had your NCB – or for how long you’ve been accident-free or claims-free? You could be in a position where you were in a minor car accident in recent years – and you and the other driver decided to settle the damage without going through your insurers. Or you may have recently made a small claim for windscreen damage to your car – which didn’t affect your NCB. Should there be any difference between your number of years NCB and the number of years you’ve been accident-free or claims-free, be very clear about the question your insurer is asking you around this history – and answer it correctly.

Deering cited a case where an individual applied for car insurance online but ran into difficulties getting a claim paid because of information provided about claims. The information was provided in a section of the form with the heading ‘No Claims Bonus’ on it. Under that heading, the individual was asked how many years of claims-free driving he had. The driver had a NCB of four years – so the answer he put down was four years. However, the driver had made a small claim in those four years, but that claim didn’t effect his NCB as his insurer at the time had discounted the claim.

“When the driver then went to make a claim [with his new insurer], the insurer claimed it was misled as it felt the driver didn’t answer the question about his claims-free driving correctly,” said Deering. “I felt the individual genuinely answered the question honestly – but that the way the question was asked [by the insurer] was slightly confusing.”

WATCH MEASUREMENTS

Be careful with measurements and distances when applying for insurance. With home insurance, there is often a requirement to provide measurements if you have a flat roof on your home, or if your property is near water.

When filling out an application form online, you may be less inclined to stop and check the size of your flat roof – or the distance your property is from water – than you would be if filling out a paper form, or getting a quote over the phone. You could regret failing to do so though.

Some insurers don’t cover flat roofs; others will cover flat roofs – but only up to a certain proportion of the overall roof area of the home.

“I dealt with a case where a customer was asked for the size of her flat roof when she was buying house insurance,” said Deering. “She answered that it was ‘about 30pc’ [of the overall roof area of the home]. The customer then went to make a claim after the roof was damaged by a storm. The assessor measured the flat roof and said it was more than 30pc – and the insurer refused the claim. In my view, the insurer shouldn’t have accepted an answer of ‘about 30pc’ given that it was a critically important question.”

Proximity of a property to water can also cause problems: some insurers won’t cover a home that is less than 200m from a river or water.

“In one case I examined, an insurer used satellite technology to measure the distance between the property and a nearby water source,” said Deering. “The technology found that the property was 197m away from the water source.” As the property was less than 200m from water, it wasn’t covered.

Insurers will be this precise when deciding whether or not to pay out – so this is how precise you should be when buying insurance online.

Sunday Indo Business

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