Critical Illness Insurance – Why Your Claim May Be Disputed?
Posted Sep 24, 2019.
Critical Illness insurance is one of the most common types of additional insurance cover in the UK. Designed to provide financial support should the policy holder be unfortunate enough to be diagnosed with one of the illnesses specified in the policy cover, with money being paid on a lump sum or a regular instalment basis (or a combination of the two). Originally created to cover illnesses such as cancer, strokes, heart attacks and other coronary conditions, cover can now be obtained for a multitude of additional illnesses such as Alzheimer’s, brain tumours and multiple sclerosis.
So, bearing in mind how important critical illness cover can be, when it comes to making a claim on a policy, why is it the type of insurance that will most likely result in a rejected or disputed claim? Research shows that whilst around 1 in 100 life insurance (or 1%) of Life Insurance claims are rejected, this number soars to 1 in 5 critical illness claims – a whopping 20% rejection rate.
Non-disclosure: the main reason for a rejected claim
The most common reason given by an insurance company when they dispute a claim on a critical illness policy is non-disclosure. This is where it comes to light that a policyholder has failed to disclose something when they originally applied for the cover, and often is cited even when the undisclosed information has nothing to do with the claim itself. Consumer groups and the Finical Ombudsman (the independent body that helps settle disputes between consumers and insurance companies) have been critical of how insurers use non-disclosure as a convenient ‘cover all’ excuse for not paying out for what often seem to be perfectly legitimate claims. Criticism has also been levelled at the lengthy application forms used to apply for cover, many of which contain ambiguous questions and seem to require a forensic level of understanding of all previous medical conditions, doctors’ visits and their respective dates; if these are subsequently found to be incorrect, then problems can occur with a claim.
Insurance companies have taken steps over the past few years to simplify the application process to reduce future disputes, but are also quick to point out that some applicants deliberately provide misleading information and false statements to either make sure they get cover that wouldn’t otherwise be provided, or to get the cover they want at a much lower premium. Insurers will always look at an individual’s medical history in the event of a claim, so this is something that policyholders should ensure is as accurate as possible when taking out the policy in the first place.
Whilst critical illness insurance companies take a pretty firm and inflexible approach when disputing claims, if the Ombudsman gets involved, they try to take a more measured approach on a claim by claim basis. They will generally consider 3 main issues: Firstly, did the insurer ask clear and unambiguous questions about the matter under dispute. If not, it is unreasonable to reject the claim on the grounds of non-disclosure. Secondly, would the additional information from the non-disclosure have resulted in a change to the policy's terms and conditions? If not, then again the claim should not be rejected. Thirdly, the ombudsman will often seek to understand the policyholders ‘mental state’ when they were applying for cover; what pressures were they under that may have led to a genuine error?
If your critical illness claim is being disputed, Bakers Solicitors can help
At Bakers Solicitors, disputed and rejected insurance claim cases are dealt with on a no win, no fee basis. There are no upfront or unexpected costs, so if you feel you have been treated unfairly by an insurance company please contact us today for straightforward and professional assistance. You can contact us by email, arrange a free consultation online or ring us on FREE on 0800 731 7284.