Why Insurance Claims May Be Rejected: Common Reasons Involving Modifications and Uber
Each year, insurers may settle billions of claims; however, numerous individuals remain dissatisfied when their claims get rejected or they receive lesser amounts than anticipated.
The Insurance and Financial Services Ombudsman, Karen Stevens, states that her office is handling an unprecedented number of grievances from individuals whose experiences have not met their expectations.
For many years, we handled roughly 3000 complaints annually along with about 300 investigations," she stated. "By the close of this fiscal year, we will have surpassed 500 investigations — it has increased significantly.
"Last year, we had just on 5000 complaints into the office."
She mentioned that an increase was partly because of growing public knowledge regarding what the program provided, yet at the same time, there were misconceptions surrounding what kind of coverage people should anticipate from their insurance.
"The biggest consumer issue that we've got most of the time is a lack of understanding on scope of cover. Because they pay their premiums, they think that they're covered for basically every contingency."
These minor points may influence your capability to file a claim.
Exclusions
Stevens mentioned that insurance policy exclusions often trip people up.
Many policies include things that will not be covered and it's important to check what these are, so you know what to expect.
"One that immediately springs to mind that I was looking at last night was in a travel context, where a woman and her husband and family were going on holiday.
"They had travel insurance. She found out that her mother was very unwell and not likely to last the time that they were going to be away, so she cancelled her trip.
"The problem was that there was an exclusion in the policy that quite clearly said that they wouldn't have unlimited cover, if the person who was unwell had been in a rest home of any sort in the 12 months prior to becoming seriously unwell or dying."
This indicated that they had a maximum coverage of $1000 for each adult, falling short of the total expenses required for the journey.
She stated, "But there wasn’t anything amiss with her health until she contracted pneumonia during her stay in the hospital." That’s all well and good; however, the policy included an exemption unrelated to her wellbeing or any other condition at that moment.
Modifications
Stevens mentioned that alterations done to vehicles might pose an issue.
If an insurance company isn’t aware of the changes made to your vehicle, there’s a particular exemption. If these alterations aren't disclosed to them and factored into their pricing, they will most likely discover this during the claims process. This discovery would reveal that you’re not covered at all. Furthermore, our strict regulations regarding nondisclosure remain intact, so it's unlikely you’ll receive coverage moving forward.
As you know, modifying vehicles remains quite popular here in New Zealand.
RebeccaStyles, an insuranceexpert from ConsumerNZ, notedthatinsurersmightapplya wideinterpretationofwhatwouldbe consideredamodification.
Parking somewhere else
Styles mentioned that if an individual received reduced premiums or a lower excess due to their vehicle being stored in one location, but instead parked it somewhere else, this could pose an issue.
The insurance company can choose, based on the policy terms, to respond with regret saying they won’t cover your claim. This might be due to a violation of one of the conditions set out in the policy, leading them to potentially void coverage altogether.
Styles said State, for example, had a list of broad examples of when someone should notify it about a change to where a car was kept.
"Where you park your car is considered a 'risk factor', so that would be taken into account, when pricing your policy - you usually park in a garage, but moved house and now park on the street.
"While I haven't come across instances of an insurer declining a claim because of this, in the policy, there is a requirement to let the insurer know."
Missing payments
If you're paying your insurance on a monthly basis and miss some, you could find your policy is cancelled.
Styles referred to a State rule stating that individuals missing a payment would receive a notification. If the issue wasn’t resolved, the policy might be terminated.
Being an Uber driver
Insurance companies require notification prior to using your vehicle for services such as Uber or DeliverEasy, and certain insurers do not provide coverage for these types of activities.
You weren't careful enough.
Exercising "due diligence" is typically a basic condition for the majority of insurance policies.
This implies that if you leave your vehicle unlocked with the keys inside, you may lose coverage if it gets stolen.
This can pose a problem in scenarios like when individuals leave their keys at the beach while they take a dip.
Stevens' office said many travel insurance policies also had a requirement that people not leave items unattended, even for very short periods of time.
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