What to do if your commercial insurer won’t pay out

If a commercial insurance claim is unreasonably rejected or only partly paid by your commercial insurer, you can take steps to ensure you receive fair treatment. Sara Beaumont, a director based at WHN’s Bury office and commercial dispute specialist explains how.

Reasons why insurers refuse to pay out

Commercial insurance claims are rejected, or not fully paid for a number of reasons and it’s advisable to make yourself familiar with them from the outset.

Among the most common is that you have given incorrect information, such as the circumstances in which something was damaged.

Another frequent issue is ‘lack of due care’. This might involve leaving business premises unsecured, or failing to follow a statutory procedure.

Not taking reasonable care when answering questions on the application form is also cited by many insurers. In these situations, you might not have told the insurer about the condition of your property, or failed to inform them about hazardous substances kept on your premises.

Other reasons for rejection include missing instalments of your premium, not following the claims process properly, not keeping to a condition of your policy, and exaggerating the amount you are asking for.

When your insurer won’t pay out the full amount

In other cases, insurers agree to pay part of your claim, but not the whole sum.

Reasons for this include not having enough insurance to cover your losses (known as being underinsured); the insurer believes your valuation is unrealistic; the item you want to replace was old and you have already benefited from using it; and you need to pay an excess.

First steps to challenging a rejected or partially paid claim

A rejected or partly-paid claim is by no means the end of the matter and you are entitled to complain if you aren’t satisfied with the reasons for rejecting your claim.

If you believe your claim should be paid out in full, you should carefully check:

• your policy documents
• the details of your policy to ensure the facts of your claim match the reason for the rejection or under-payment
• you gave all the correct details at the start

Check the wording of your cover

If the wording is unclear or not fully explained, make a note of this. It’s important because insurance companies are legally required to provide straightforward and accessible information.

New regulations mean insurers aren’t allowed to turn down a claim if you took reasonable care to reply to all their questions honestly and fully. If your insurer didn’t request information when you took out the policy and later says you should have provided it voluntarily, make a note of this also.

You should then look for any other documents or information relevant to your policy. This could include an email or letter telling the insurance company about a change in your circumstances – which is your responsibility.

Get in touch with your insurance company

Next you should contact the insurer and talk to their complaints handlers, or send an email or letter of complaint to the contact provided in the company’s complaints procedure.

Your correspondence should include the date, your company’s name, address and policy number; any evidence to support your complaint; how you want the insurer to put things right; a clear explanation of your complaint; and why you believe your claim should not have been rejected or under-paid.

Using specialist legal expertise

If the insurance company refuses to change its decision and you remain unhappy, you can seek assistance from a specialist solicitor.

A legal expert will have a thorough understanding of the technically complex field of insurance law and can advise you on the viability of taking the matter forward.

If you go down this route, the solicitor will negotiate with the insurance company on your behalf and ensure you are robustly represented if your case goes to court.

Sara specialises in resolving commercial disputes at all levels – both before and after the issue of court proceedings – and is experienced in the use of alternative dispute resolution, particularly mediation.

For further advice on dealing a commercial insurance claim or a dispute with your insurer, call Sara Beaumont on 0161 761 4611 or email her at [email protected]