Why You Could Lose A Fortune On A Refused Insurance Claim

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You may wonder why many UK insurers refuse to pay insurance claims. This is part of the agreement between the insured and the insurer, isn’t it? Yes.

An insurer cannot refuse to pay legitimate claims. The insurer can, however, question the legitimacy and make a payment. Insurers are now making greater efforts to verify that a claim is legitimate. You might want to reconsider if you feel this is unnecessary.

Claim payments are affected by an increase in payouts and costs

As with everyone else, the global economic crisis has had a major impact on the insurance industry. The payouts for claims are now very expensive in all aspects. The cost of medical treatments, burial costs, and legal fees has risen. Administrative costs have also increased.

The global demand for building materials has increased dramatically due to recent natural disasters. Many businesses have also closed down due to poor economic conditions and climatic changes. This has created a shortage of certain materials and services. Insurance companies are now paying more for property repairs and replacements.

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Insurance companies have cut back on their investments in stocks and other risky ventures due to the economy’s poor state. To stay in business, they must raise their premiums. In order to remain in business, the premiums have increased. This makes insurance less attractive to consumers. The insurers are now required to pay increasing claims at higher costs and receive less money.

How insurance fraud impacts claim payouts

In the past, there have been various forms of insurance fraud. In order to get compensation from insurance companies, some people may pretend to have suffered injuries. Perhaps the fraud involved a doctor charging insurance companies for medical treatment that was never rendered. Sometimes, people will claim that something was stolen or lost when in fact it wasn’t.

The poor economy is affecting all consumers. Intentionally committing fraud is something that people who would never have considered in the past defrauding insurance companies. These people aren’t criminals. These people are ordinary citizens trying to save money on their insurance premiums. This fraud has led to at least a 30% rise in the number of claims that are denied by insurance companies.

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Primarily-motive claims are denied

Major insurers state that the main reason for rejections of claims is because the insured has done one or more of the following:

Inflating the insurance companies about who will be the primary driver by not disclosing convictions for “Fronting” someone else.
Refrain from disclosing prior claims
Modifications to a vehicle not being disclosed
It is not necessary to disclose the exact address at which a car is kept
It is not possible to disclose the true value and condition of property
False documentation or false information
Not disclosing infrastructure modifications
Claiming services were provided by certified or qualified professionals when it wasn’t.
Not disclosing conditions that may have existed previously
Falsification of information regarding accidents or property damage

Consumers who engage in this fraud believe they are not harming anyone. The consumers believe that the insurance companies should still pay the claims. It has been estimated that this fraud adds around PS30 to every private vehicle insurance policy in the UK.

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These fraudsters can cause financial loss to policyholders as well as insurers. They can also cause harm to themselves. Fraudsters are responsible for all costs incurred by the insurer if they refuse to pay. The insurer may also cancel insurance. This will make it more expensive and difficult for fraudsters to obtain new insurance.

Fraud isn’t just confined to motor insurance. It affects all types of insurance in the UK. Every honest consumer must pay increased premiums to support fraudsters by purchasing every type of insurance they have. These economically driven fraudsters end up causing harm to every British citizen.