Insurers say more claims will fail for lack of honesty
THOUSANDS of householders are exposing themselves to being turned down if they have to make a claim on their motor, home or life insurance.
The risk results if people fail to be upfront with insurers on previous claims, the Irish Brokers' Association (IBA) has said.
A surge in consumers buying cut-price policies on the internet has meant people are less inclined to fully disclose medical histories, past claims or a refusal to quote from another insurance firm.
Consumers can end up believing they do not have to disclose all material facts, the IBA's Brian McNelis said. This was because switching insurance providers had become so quick and easy online.
"As we move further away from face-to-face interaction, there seems to be a higher instance of non-disclosure," Mr McNelis said. "Consumers need to realise, for their own sakes, that the duty of care ultimately rests with them as it is their claim that may be on the line."
Leaving out a key piece of information may lead to a refusal to pay out on a claim, or the insurer may decline to renew the policy. There could also be a huge hike in the premium if the insurer realises it was not given important information by the consumer.
"Non-disclosure of a previous claim, whether or not it is of a similar nature, could be grounds for non-payment by the insurance company. There is little point in forking out the cost of the insurance premiums if you are not going to be covered in the event of a claim," Mr McNelis said.
The IBA added that insurance policies contained a non-disclosure clause that was intended to protect the interests of insurers against those who intentionally left out essential information that might lead the insurer to refuse cover or increase the premium because of a higher risk.
Such necessary information could include the fact that a house has flooded three times in the past five years -- as there is a risk of it happening again. "If your car has been stolen because it was supped-up, they will want to know," Mr McNelis said.
But he added that the non-disclosure clause was not intended for those who had genuinely forgotten about a claim they made in the past or other material fact.
The insurance expert said that insurance companies were now more likely to reject claims on the grounds of non-disclosure.
During the boom, they were prepared to overlook the failure to disclose all material facts.
Mr McNelis added: "The overall volume of claims has risen in the past year due to major global events as well as local recession-related issues.
"Insurers' profits are down, so they are more careful about the money they pay out in claims.
"The bottom line is -- if you are unsure, declare it. Otherwise, you may be wasting your money on the premium."