The publication of a parliamentary bill could do away with a law that punishes insurance claimants for honest mistakes

An archaic law that means thousands of insurance claims each year are unfairly rejected by insurers could be overturned following the imminent publication of a parliamentary bill.

Claims made on motor, travel, household and health policies are routinely turned down by some insurance companies under an anomaly in the law, which dates back to 1906 and puts a "duty of disclosure" on the policyholder.

This means policyholders are expected to disclose not only things they have been asked for, such as known medical conditions, but also things that they haven't which could later turn out to be significant. So, someone who is diagnosed with throat cancer, for example, could see their health insurance claim rejected if they had failed to mention a past visit to the doctor for a sore throat when they applied for the policy – even when the doctor prescribed nothing more than a few days' rest, and the question was not asked by the insurer.

Claims are also turned down when householders accidentally get information wrong. A common example is when applying for household insurance, where the question "Are the locks British 'safety-standard', a five-lever mortice lock conforming to BS3621, or a cylinder rim deadlock?" is commonly asked. Not surprisingly – especially since a householder would often need to take the lock out of the door to find out – it is often answered wrongly. Yet, if a householder claims on their policy, even for something unrelated to locks, such as a fire, they could find their claim rejected.

Consumer groups, health charities and many insurance companies have long called for a change to the law, saying that it is unclear and unfair.

"At the moment, the obligation is on you, the consumer, to disclose all the facts that might have an effect – decisive or not – on the mind of a prudent underwriter in assessing the risk," says Peter Tyldesley, a lecturer at the University of Manchester and insurance law specialist. "This is setting consumers up to fail."

After years of consultation on the issue, on 15 December the Law Commission will present a draft bill to parliament that should spell the beginning of the end to these often disastrous discrepancies in the law.

The Observer understands that the bill will propose the law is changed to abolish the duty of disclosure – volunteering information without being asked – to providing only the information asked for by insurers. It will also propose changes to the way insurance companies deal with policyholders when they get something wrong. So, for example, if a policyholder makes an innocent mistake, they will have their claim paid in full and if they are "careless", rather than reckless, they should get a proportionate payout. If, for example, they have only paid half the premium which would have been charged had the underwriter known the true facts, they may receive a payout of only half the amount of their loss.

"The issues of non-disclosure and misrepresentation have been running for many years," says Tamara Goriely of the Law Commission. "We think the law needs to be changed so that it is clear, accessible and easy to understand."

At the moment, around 1,000 insurance cases a year involving non-disclosure end up with the Financial Ombudsman Service, which often then rules in a policyholder's favour. The vast majority of these claims are for large amounts of money, says the Law Commission, often involving people going through a particularly vulnerable time such as dealing with a cancer or MS diagnosis.

"We've always had a broader view of disclosure than the courts," says an FOS spokesman. "If the insurer hasn't been specific enough in its questions, for example, we might rule in the consumer's favour."

Marketing consultant Inga McVicar had to turn to the FOS in 2007 when she was diagnosed with ovarian cancer but found herself unable to claim on her critical illness insurance policy. Her insurance company turned down her claim over a discrepancy in her answers on the initial form, which was due to an error by her financial adviser.

As soon as she realised the error, says McVicar, 33, she told her insurer but it treated the policy as if it had never existed. "What shocked me more was the horrific way my insurance company dealt with me over it," she says. "They branded me a liar, failed to return my calls and, to add insult to injury, in a letter to me referred to my diagnosis as breast cancer not ovarian cancer."

By February 2008, McVicar had to return to work as she is self-employed, despite the fact she was undergoing chemotherapy. "To add to this, the anomaly in my policy the insurer was referring to didn't remotely relate to my diagnosis and it turns out even if I had answered that one question correctly I would have been covered, albeit with increased premiums," she says.

Macmillan Cancer Support provided Inga with a grant to help with her basic needs while she took her case to the Financial Ombudsman Service. The ombudsman ruled in her favour, agreeing that it was a genuine mistake. She got a payout of £46,000 and is now in remission from the cancer.

Many insurers do not apply the letter of the law, taking a more reasonable approach to claims. However, a minority do apply it rigorously.

A spokesman for the Association of British Insurers, said: "We don't believe there is any need for intervention as far as non-disclosure is concerned. Where there are areas of concern, we believe these have been addressed. We have introduced a code of practice for critical illness insurance and the number of complaints has reduced significantly."

However, progress has not been made in other areas, says Goriely. "In household, motor and travel, particularly where the claim relates to a medical condition, there is no evidence that [disputes over non-disclosure] have dropped off."

"We think it's ridiculous that consumer insurance is based on an archaic law from 1906," says Phil Jones, public affairs officer at Which?

"The Law Commission report is an excellent opportunity to address this issue so we urge all political parties to support the bill."

■ Have you had a claim refused for non-disclosure, and did you resolve the issue? Would you support a change in the law? Email us at cash@observer.co.uk or write to us at Cash, The Observer, Kings Place, 90 York Way, London, N1 9GU.

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The publication of a parliamentary bill could do away with a law that punishes insurance claimants for honest mistakes

An archaic law that means thousands of insurance claims each year are unfairly rejected by insurers could be overturned following the imminent publication of a parliamentary bill.

Claims made on motor, travel, household and health policies are routinely turned down by some insurance companies under an anomaly in the law, which dates back to 1906 and puts a “duty of disclosure” on the policyholder.

This means policyholders are expected to disclose not only things they have been asked for, such as known medical conditions, but also things that they haven’t which could later turn out to be significant. So, someone who is diagnosed with throat cancer, for example, could see their health insurance claim rejected if they had failed to mention a past visit to the doctor for a sore throat when they applied for the policy – even when the doctor prescribed nothing more than a few days’ rest, and the question was not asked by the insurer.

Claims are also turned down when householders accidentally get information wrong. A common example is when applying for household insurance, where the question “Are the locks British ’safety-standard’, a five-lever mortice lock conforming to BS3621, or a cylinder rim deadlock?” is commonly asked. Not surprisingly – especially since a householder would often need to take the lock out of the door to find out – it is often answered wrongly. Yet, if a householder claims on their policy, even for something unrelated to locks, such as a fire, they could find their claim rejected.

Consumer groups, health charities and many insurance companies have long called for a change to the law, saying that it is unclear and unfair.

“At the moment, the obligation is on you, the consumer, to disclose all the facts that might have an effect – decisive or not – on the mind of a prudent underwriter in assessing the risk,” says Peter Tyldesley, a lecturer at the University of Manchester and insurance law specialist. “This is setting consumers up to fail.”

After years of consultation on the issue, on 15 December the Law Commission will present a draft bill to parliament that should spell the beginning of the end to these often disastrous discrepancies in the law.

The Observer understands that the bill will propose the law is changed to abolish the duty of disclosure – volunteering information without being asked – to providing only the information asked for by insurers. It will also propose changes to the way insurance companies deal with policyholders when they get something wrong. So, for example, if a policyholder makes an innocent mistake, they will have their claim paid in full and if they are “careless”, rather than reckless, they should get a proportionate payout. If, for example, they have only paid half the premium which would have been charged had the underwriter known the true facts, they may receive a payout of only half the amount of their loss.

“The issues of non-disclosure and misrepresentation have been running for many years,” says Tamara Goriely of the Law Commission. “We think the law needs to be changed so that it is clear, accessible and easy to understand.”

At the moment, around 1,000 insurance cases a year involving non-disclosure end up with the Financial Ombudsman Service, which often then rules in a policyholder’s favour. The vast majority of these claims are for large amounts of money, says the Law Commission, often involving people going through a particularly vulnerable time such as dealing with a cancer or MS diagnosis.

“We’ve always had a broader view of disclosure than the courts,” says an FOS spokesman. “If the insurer hasn’t been specific enough in its questions, for example, we might rule in the consumer’s favour.”

Marketing consultant Inga McVicar had to turn to the FOS in 2007 when she was diagnosed with ovarian cancer but found herself unable to claim on her critical illness insurance policy. Her insurance company turned down her claim over a discrepancy in her answers on the initial form, which was due to an error by her financial adviser.

As soon as she realised the error, says McVicar, 33, she told her insurer but it treated the policy as if it had never existed. “What shocked me more was the horrific way my insurance company dealt with me over it,” she says. “They branded me a liar, failed to return my calls and, to add insult to injury, in a letter to me referred to my diagnosis as breast cancer not ovarian cancer.”

By February 2008, McVicar had to return to work as she is self-employed, despite the fact she was undergoing chemotherapy. “To add to this, the anomaly in my policy the insurer was referring to didn’t remotely relate to my diagnosis and it turns out even if I had answered that one question correctly I would have been covered, albeit with increased premiums,” she says.

Macmillan Cancer Support provided Inga with a grant to help with her basic needs while she took her case to the Financial Ombudsman Service. The ombudsman ruled in her favour, agreeing that it was a genuine mistake. She got a payout of £46,000 and is now in remission from the cancer.

Many insurers do not apply the letter of the law, taking a more reasonable approach to claims. However, a minority do apply it rigorously.

A spokesman for the Association of British Insurers, said: “We don’t believe there is any need for intervention as far as non-disclosure is concerned. Where there are areas of concern, we believe these have been addressed. We have introduced a code of practice for critical illness insurance and the number of complaints has reduced significantly.”

However, progress has not been made in other areas, says Goriely. “In household, motor and travel, particularly where the claim relates to a medical condition, there is no evidence that [disputes over non-disclosure] have dropped off.”

“We think it’s ridiculous that consumer insurance is based on an archaic law from 1906,” says Phil Jones, public affairs officer at Which?

“The Law Commission report is an excellent opportunity to address this issue so we urge all political parties to support the bill.”

■ Have you had a claim refused for non-disclosure, and did you resolve the issue? Would you support a change in the law? Email us at cash@observer.co.uk or write to us at Cash, The Observer, Kings Place, 90 York Way, London, N1 9GU.

]]> http://www.writeot.com/unfair-insurance-law-may-be-overturned.html/feed 0 http://www.writeot.com/finding-travel-insurance-when-youre-over-50-can-be-a-challenge.html http://www.writeot.com/finding-travel-insurance-when-youre-over-50-can-be-a-challenge.html#comments Mon, 02 Nov 2009 10:57:10 +0000 iwellbc http://www.guardian.co.uk/money/2009/nov/01/travel-insurance-for-over-50s

Specialist policies for older travellers can be tempting, says Harriet Meyer, but it's always worth looking around

Autumn is a prime holiday time for older people, with plenty of bargain breaks available once children have gone back to school. But while travel costs might be lower, finding reasonably priced travel insurance that provides the cover you need when you are in your 50s or older can prove a challenge.

The older you get, the more care you should take when picking policies, as the launch of a new product this month from Staysure.co.uk, aimed at the over-50s, demonstrates.

This claims to be up to five times cheaper than its rivals and to cover 220 medical conditions at no extra charge – with prices starting at about £14 for a 50-year-old couple on a seven-day trip to Europe. It will provide cover for those aged up to 85 on single policies, and 81 for annual cover.

"The claim that they cover so many pre-existing medical conditions might look impressive, but on closer inspection it comes across as more of a marketing tactic than a true differentiator, as most of the conditions are minor ailments that wouldn't trouble the average travel insurance underwriter," says Lee Griffin, business development director at the comparison site Gocompare.com.

"Among the conditions covered are toothache, stomach bug and the common cold; there is no mention of conditions that are of greater concern to the over-50s, such as heart complaints, stroke or cancer – these will be charged an additional premium, just like many other policies."

However, Ryan Howsam, chief executive at Staysure.co.uk, defends the policy: "As well as including protection for 220 medical ailments including blindness, broken bones, hernias and hip replacements as standard, the policy can be tailored for travellers with more serious conditions including diabetes, stroke, heart conditions and cancer following a simple medical screening process."

The company will require further information on conditions that have occurred in the past two years.

According to Gocompare.com, a 50-year-old couple travelling to Spain for two weeks on a single-trip policy would pay £19.05 with Staysure.co.uk, with an additional £5.72 for cancellation cover.

"The same couple could find a standard single-trip policy from £16.96, which includes cancellation cover from a standard insurer," says Griffin. "Of course, in some situations this provider will be cheaper – but it does not always offer the best deal, so it's vital to compare policies."

Travel insurance for the over-50s is a growing product area as the UK population gets older, according to Steven Williams, the head of travel insurance at the comparison website Confused.com. Even so, he adds, people who are over 50 are still likely to pay higher premiums than their younger counterparts, and that situation is not likely to change any time soon.

It is worth scanning the whole market when picking a policy rather than sticking to a specialist – many standard providers, such as Marks & Spencer, offer competitive products – although Saga, Rias and Age Concern are some that cater for the older traveller.

Joe Young, from Age Concern Insurance Services, says: "Our cover is tailored for the needs of older travellers, so there are no upper age limits and we aim to cover pre-existing medical conditions if possible."

The cost of travel insurance rises sharply once you are over 65, with typical annual premiums often exceeding £100 – yet it is crucial to avoid focusing simply on the price and to check the medical, baggage and cancellation cover as well, as many policies contain exclusions and caveats.

Mark's & Spencer's travel policy is a good example: a 70-year-old in good health would pay £148 for worldwide cover including the USA, Canada and Caribbean, quite a high premium.

But Williams says the extra cost is worth paying because the policy offers a good level of cover, although it does require additional screening for serious health conditions, such as cancer, suffered by the policy applicant in the past 12 months. This can be done online or over the telephone.

He adds: "The amount of cover is more than on a standard policy: you get up to £6,000 of cancellation cover – with the average being between £2,000 and £3,000 – baggage cover at £2,500 and £10m medical cover."

Holidaymakers should also remember that if they want to travel for more than 45 days on any one trip or have pre-existing medical conditions, they must always check with their insurer before assuming they are covered. While it might require an additional "top-up'' payment, failing to deal with these issues in advance can lead to claims being refused.

■ Have you ever been refused cover, or had to pay an excessively high premium for your travel insurance? Email us at cash@observer.co.uk

]]> Specialist policies for older travellers can be tempting, says Harriet Meyer, but it’s always worth looking around

Autumn is a prime holiday time for older people, with plenty of bargain breaks available once children have gone back to school. But while travel costs might be lower, finding reasonably priced travel insurance that provides the cover you need when you are in your 50s or older can prove a challenge.

The older you get, the more care you should take when picking policies, as the launch of a new product this month from Staysure.co.uk, aimed at the over-50s, demonstrates.

This claims to be up to five times cheaper than its rivals and to cover 220 medical conditions at no extra charge – with prices starting at about £14 for a 50-year-old couple on a seven-day trip to Europe. It will provide cover for those aged up to 85 on single policies, and 81 for annual cover.

“The claim that they cover so many pre-existing medical conditions might look impressive, but on closer inspection it comes across as more of a marketing tactic than a true differentiator, as most of the conditions are minor ailments that wouldn’t trouble the average travel insurance underwriter,” says Lee Griffin, business development director at the comparison site Gocompare.com.

“Among the conditions covered are toothache, stomach bug and the common cold; there is no mention of conditions that are of greater concern to the over-50s, such as heart complaints, stroke or cancer – these will be charged an additional premium, just like many other policies.”

However, Ryan Howsam, chief executive at Staysure.co.uk, defends the policy: “As well as including protection for 220 medical ailments including blindness, broken bones, hernias and hip replacements as standard, the policy can be tailored for travellers with more serious conditions including diabetes, stroke, heart conditions and cancer following a simple medical screening process.”

The company will require further information on conditions that have occurred in the past two years.

According to Gocompare.com, a 50-year-old couple travelling to Spain for two weeks on a single-trip policy would pay £19.05 with Staysure.co.uk, with an additional £5.72 for cancellation cover.

“The same couple could find a standard single-trip policy from £16.96, which includes cancellation cover from a standard insurer,” says Griffin. “Of course, in some situations this provider will be cheaper – but it does not always offer the best deal, so it’s vital to compare policies.”

Travel insurance for the over-50s is a growing product area as the UK population gets older, according to Steven Williams, the head of travel insurance at the comparison website Confused.com. Even so, he adds, people who are over 50 are still likely to pay higher premiums than their younger counterparts, and that situation is not likely to change any time soon.

It is worth scanning the whole market when picking a policy rather than sticking to a specialist – many standard providers, such as Marks & Spencer, offer competitive products – although Saga, Rias and Age Concern are some that cater for the older traveller.

Joe Young, from Age Concern Insurance Services, says: “Our cover is tailored for the needs of older travellers, so there are no upper age limits and we aim to cover pre-existing medical conditions if possible.”

The cost of travel insurance rises sharply once you are over 65, with typical annual premiums often exceeding £100 – yet it is crucial to avoid focusing simply on the price and to check the medical, baggage and cancellation cover as well, as many policies contain exclusions and caveats.

Mark’s & Spencer’s travel policy is a good example: a 70-year-old in good health would pay £148 for worldwide cover including the USA, Canada and Caribbean, quite a high premium.

But Williams says the extra cost is worth paying because the policy offers a good level of cover, although it does require additional screening for serious health conditions, such as cancer, suffered by the policy applicant in the past 12 months. This can be done online or over the telephone.

He adds: “The amount of cover is more than on a standard policy: you get up to £6,000 of cancellation cover – with the average being between £2,000 and £3,000 – baggage cover at £2,500 and £10m medical cover.”

Holidaymakers should also remember that if they want to travel for more than 45 days on any one trip or have pre-existing medical conditions, they must always check with their insurer before assuming they are covered. While it might require an additional “top-up” payment, failing to deal with these issues in advance can lead to claims being refused.