Some examples of claims that failed:

  • An antiques dealer took out a policy online. They sold a sofa that had a broken spring. Their customer nearly died when the sharp end of the broken spring pierced her femoral artery. The claim was thrown out on the basis that “we don’t insure second-hand goods”. The policy was in the name of XXXXXX Antiques Ltd! The case went to the Financial Ombudsman Service but, by the time they had found in favour of the policyholder, the antiques business had had to close.
  • A young man dropped his mobile phone over the side of a Thames party boat. His claim for loss rejected on the grounds that he knew where it was. So he claimed for damage but that was refused because the insurance company demanded to see the damaged item. The Financial Ombudsman found in favour of the young man but it took 18 months because of the difficulty in obtaining responses from the insurance company.
  • A couple on holiday in India were delayed returning to the airport due to their bus being in an accident. They were not hurt but it took a long time for a replacement bus to become available. Their claim for ticket transfers and overnight accommodation was rejected as the insurer had only covered them for the journey out from the UK, not the return. Again the Financial Ombudsman found in the claimants’ favour and in a rare moment of candour, actually stated that the insurance company were “stupid”.
  • Fire destroyed a shed in the garden and all the contents but the claim was rejected as the policy only covered the main dwelling. This person also had a double detached garage, another shed and a greenhouse which were also therefore not insured. And, yes, the Financial Ombudsman found in favour of the claimant.
  • And this one I love. A couple of my friends in senior positions in insurance created a fake website selling gadget insurance for £20 a policy. They sold 48 policies in a day. Everybody received a full refund although only 4 of their customers queried the actual cover – which was limited to alien abduction and zombie attack. The website has been taken down so, if you are looking for cover against your smartphone being abducted by aliens, you’re out of luck.

Failure rates:

And that is why 25% of all claims on all internet policies fail at point of claim………….Our policies do not fail.

And if you don’t read the quote properly, this can happen:

On a slight tangent, I had an art gallery client who was insured via my previous employer for many years. I dealt with him for four years, during which time he had a couple of claims that were settled promptly. He was paying around £1,500-£1,700 a year. At one renewal, he rang up in a right old strop, accusing us of ripping him off for years and that he had now “found us out” as he had been quoted online £185. I told him that could not be right and there must be something missing. He was adamant and we lost his business. A few weeks later, he rang very sheepishly to ask if we could help. It transpired that the £185 he was quoted was per month, not per year and he had signed up to a direct debit. He was back on cover with us the following year.

The benefits of using a good insurance broker:

  1. The sort of problems described above are not going to happen;
  2. In the event of the 1 in 10,000 chance that you do have an issue, your insurance broker will be fighting for you. In the claims cases described above, the disadvantaged person had to do all the work and, if you have ever had dealing with the Financial Ombudsman, you will know that it isn’t easy. They have a massive caseload so you have to keep chasing.

The internet is a good thing:

I have bought some very nice things from Amazon and eBay but it’s not where I would risk insuring things that I really care about.