Contractors / Builders

Builders insurance

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Why Are Insurance Claims Declined?

Much has been written about claims under insurance policies, not being paid by the insurer. This is a little unfair as you tend to only hear about the claims that are not paid and the problems experienced by policyholders but seldom do you hear when a customer receives a good claims settlement and a fast and efficient service. So why are claims denied by an insurance company? Is it that they simply don’t like paying out or is it something else?


6 Typical Reasons For Declined Insurance Claims


1. Non-disclosure of material fact
If you take a new policy without informing your new insurer of previous claims and facts with previous insures they can repudiate your claim based on non- disclosure of material fact- Always disclose your claims history as it changes your underwriting criteria and different loadings will be applied. Sometimes policy holders deliberately provide false information to obtain a cheaper quote and if this proves to be the case, the insurer will have good grounds for not only declining a claim but cancelling the policy also.


2. Changes in policy risk during insurance period
If you for some reason during the course of a policy your risk increases insurers will need to be informed and they may increase your premium i.e. a change in your business activities/description during the year.  These must be disclosed to insurers mid policy.


3. Late Notification
If you suffer a loss you need to inform your insurance company as soon as possible. Some insurers allow up to 30 days to report a claim. Not reporting a claim in good time may lead to your claim be refused.


4. Policy Conditions & Warranties
At inception you will be made aware of any policy Conditions & Warranties that apply, if you fail to comply, a claim can be void. For example if there is a condition relating to Health & Safety procedures including a Protective Clothing Warranty and the policyholder does not comply or relay this to his/her employees this may lead to a claim been declined.


5. Failure to comply with relevant Health & Safety legislation and training requirements
Not complying with Health & Safety regulations for the protection of the safety, health and welfare of persons working on construction sites

Employees and any other operatives for whom you are responsible do not have a valid Safe Pass.

Registration Card and have not completed appropriate Training/Assessment Programme for plant they operate on site.

Using un-guarded machines and / or un-inspected lifting or pressure plant & equipment.


6. Failure to pay insurance premium or direct debit is declined
Unfortunately if you fail to pay your insurance premium or your direct debit is declined, your insurance lapses. Always make sure that you have sufficient funds in your account to cover the premium, it is not worth the risk of having your insurance claim rejected.

To ensure that you have the best possible chance of having a claim met, it is important to make sure that your contract was set up correctly in the first place. All answers to questions must be as accurate as possible and if you are unsure as to what constitutes a material fact, then ask your insurance provider for help. When you receive your policy documents, read them carefully, study the covers and in particular the terms and conditions, don’t wait until you have a claim.  Use a reputable, experienced and professional Insurance Broker.

For more information on Construction Insurance with S.A. Faughnan Click Here