Posts Tagged ‘insurance’
The Financial Ombudsman Service says that they’ve seen a spike in complaints about policies being stopped without any warning and that, in the worst instances, motorists only find out about it when they’ve been pulled over for driving with no insurance.
The Ombudsman says that those who allow their insurer to renew their policies automatically, but don’t realise that they must declare any change in circumstances since first purchasing the cover, are the people most at risk.
Basically, if your insurer thinks that things are different, they may cancel your policy and there’s a chance they won’t tell you. It seems that motorists who have benefited from reduced premiums for having a no-claims discount are also at risk from getting their policy cancelled without being told.
And this is not to be sniffed at, as the penalty for driving without insurance is six points on your licence and a £300 fine. The Financial Ombudsman says: “These types of communication breakdowns can have very serious consequences for the people affected.”
So if your car insurance automatically renews, it is worth contacting your insurer and seeing if you can change that option or, indeed, ask them to provide you with clear correspondence of any changes in your policy.
The UK’s financial watchdog, the Financial Conduct Authority, are not happy with the insurers and price-comparison sites. They’ve said that the genuine costs of buying insurance online have been obscured by “failings and poor practices”.
This, of course, prevents people from getting a true picture when comparing prices and when weighing up the final costs of the variety of options.
The FCA said that they found insurance and price comparison sites “do not always provide clear and understandable information about the overall cost of paying for insurance” which results in consumers in a situation where they could “struggle to compare the difference” between policies.
They stated that, in far too many instances, websites are failing to explain the price difference between paying for a policy upfront, and spreading the cost over instalments which usually charges interest.
The FCA said their researchers found “a number of cases” where info about fees and APR was not provided, which “limited a customer’s ability to make an informed choice about how to pay”. The researchers also spotted that a “wide range” of APRs were being charged when people opted to pay in instalments, which just shows how important it is for consumers to be able to look at the true price of different offers and policies.
“Consumers should expect clear information about the payment options available to them,” said Linda Woodall, acting director of supervision at the FCA. “Regardless of whether people choose to pay upfront or in instalments, it’s important that they can see exactly what they are signing up for and how much it costs so they can decide whether they are getting a fair deal.”
The FCA will be following all this up, saying that they’re going after businesses where they found “specific examples of failings and poor practice” and, in addition to that, they will “consider the findings of the review and take action where necessary.”
Everyone knows that you have to disclose an accident or motoring conviction when buying car insurance, and if you’ve made a claim, then your insurer is going to know about it anyway. But what about the situation where there has been an ‘incident’ that was not your fault and you haven’t made a claim? Well, not only are you required to tell your insurer, but they might bump up your premium as a consequence…
If you have been at fault in an accident, it is perhaps reasonable to assume that your premiums will go up, although this might depend on any protected no claim bonus arrangements. Some insurers will also penalise you for a no-fault claim- and while this might seem unfair, from the insurer’s point of view you are a higher risk. Admiral, for example, increase premiums after a single no-fault accident, such as someone driving into your parked car. They claim it’s just risk assessment:
“We use many years of claims data from millions of claims in order to accurately calculate the risk of a customer going on to make a claim,’ a spokesperson said.
“Our claims statistics show customers who have had a non-fault claim are more likely to make a claim in the future, compared with customers who have not had a non-fault claim. By having a non-fault claim our customers fall into a category that we see as a higher risk to insure.”
And while a no-fault accident for which you have made a claim might seem fair game, some insurers will also uprate your premium if you don’t even make a claim:
“We rate on the fact an incident has occurred, whether they have claimed or not,” finished Admiral, haughtily.
Insurers argue that someone who has had an accident is more likely to claim again for many reasons. It could reflect on the types of places that they are driving, or it could also say something about where the car is parked. Insurers might also think that it is a reflection of the motorist’s driving habits; perhaps they drive in ways that are more likely to result in an accident even if they didn’t directly cause it.
But if you don’t make a claim, how will your insurer know, right? Wrong. All insurers will state in their terms and conditions that customers must report incidents regardless of whether they make a claim.
The Association of British Insurers admits that this is partly so that insurers can adjust premiums accordingly, but is also to alert your insurer to the possibility that there could be a claim made against you at some point in the future, for example where an injury becomes apparent or symptoms alleged sometime after the original incident. Yeah, right.
All this information is stored on the Claims and Underwriting Exchange (CUE), a massive database containing 32 million claims records that is shared by all insurance companies. And it means that once one insurer knows something, they all do.
But what can you do about it? It sounds simple, but you need to shop around- as not all insurers treat this information in the same way. The financial ombudsman says that “some insurers do rate on notification only incidents where no claim has been made, but it usually won’t increase the premium as much as a non-fault claim, which in turn does not increase it as much as a fault claim would.”
Some examples of insurers that don’t increase premiums for no-fault claims include the Co-operative insurance and Direct Line, but there’s no guarantee this would make them the most competitive, nor that they wouldn’t increase premiums for some other, unconnected reason.
So, what if you do not report a non-fault incident? While this is a very tempting option, if you do not report an incident and your insurer later finds out, they may claim that your policy is invalid and refuse to pay out on future claims.
However, in this situation, it would be up to the insurance company to prove that it would not have covered you, would have charged you more or would have offered a lower level of cover had it known about the incident.
The financial ombudsman (to whom an insurance dispute like this might be referred if you and the insurer can’t agree) also said that “ the way insurers calculate their premiums is their own commercial decision, provided they treat everyone in the same situation in the same way, and if consumers are asked about incidents and losses then they should disclose them whether they’re recorded on the insurance central database or not.” So you have been warned.
These figures are from the AA, who say that the average quote for an annual comprehensive car insurance policy dropped to £530.47, which follows numerous months of price rises. However, insurers have form when it comes to trying to lure motorists in with price drops in the first quarter.
However, messing things up are the number of claims for whiplash, which is putting an upward pressure on prices, according to the AA. They say that the cost of claims is larger than premium income for many insurers.
Of course, Bitterwallet talked about this a while ago, with drivers coughing-up £93 each (on average) due to the volume of whiplash claims.
“We’re starting to see insurers quoting higher prices and I think that’s the beginning of a trend, but the market remains very competitive,” says Janet Connor, managing director of AA Insurance.
“My greatest fear is that if insurance fraud such as whiplash injury claims isn’t brought under control and quickly, we will see a repeat of the spiralling premiums of 2010 and 2011 when the cost of the average policy rose by over 40 per cent in just 12 months.”
An obscure European law has resurfaced to potentially bite people in the behind, after a European court has ruled that any moving vehicle, whether on public or private land, should be covered by motor insurance in case of an accident. This means that ride-on lawnmowers, mobility scooters and even golf buggies could need an insurance policy- even in your own garden.
This issue, which goes back as far as 1972, has reared its head again after Damijan Vnuk, a farm worker from Slovenia, brought a case to the European courts last year after falling from a ladder when it was hit by a tractor.
The court in Brussels decided that any moving vehicle, whether on public and private land, should have actual motor insurance, the normal proviso that vehicles not driven on the road are exempt ceasing to apply. The argument of the court was that tractors are “consistent with the normal function” of a motor vehicle, so normal insurance rules relating to cars and motorbikes therefore apply.
Under British law, currently only vehicles travelling on a “road or other public place” – with the exception of mobility scooters – are required to be insured, but the ruling would see this extended to any place, including farmyards and golf courses.
The Telegraph reports that the Department for Transport is currently in discussion with the industry body, the Association of British Insurers, to clarify which types of vehicles will need to be insured and at what level. Insurers have already reported a surge in calls from customers worried whether their golf caddies and lawnmowers need to be covered, and if so, whether third party cover is sufficient.
“Everybody is confused as to what the EU is up to,” said Mark Effenberg, of Blue Badge, a specialist insurer for mobility scooters. “We’re now waiting to see how the directive will be interpreted.”
But, although an irritation, and an unnecessary cost, the cost of insuring mobility scooters is not prohibitive, with mobility scooter policies costing around £90 for third party and breakdown, and a determined pensioners in search of this week’s cash could probably do some damage to an unsuspecting passer-by. While mobility scooters are currently regarded as exempt, official guidelines state that mobility scooter drivers are “strongly advised that people take out insurance” to cover accident or theft. While this is (currently) not considered a legal requirement, in some cases forcing the issue could, in some cases, be a good thing.
Celia Frodsham of Stephenson’s Solicitors said: “Uninsured people have, in the past, lost their homes after being sued for negligence because they have injured people with their scooters. Therefore insurance is recommended to avoid this.”
As the politicians argue over whether living standards have improved or not, it appears UK homeowners should be celebrating the lowest seasonal home insurance premium prices for new customers in four years.
MoneySuperMarket’s analysis of over 14 million home insurance quotes obtained between March 2010 and February 2015 showed that average home insurance premiums for new customers fell in 2014/15 to £115.82 – 22% lower than four years ago (2010/11), when the average winter premium was £148.85, and 27% cheaper than in spring 2010, when prices were as high as £158.93. Annually, premium prices have dropped an average of eight per cent since last winter (2013/14), when the average cost was £125.53.
The analysis also revealed regional winners and losers- for example, new customers in the HR Hereford postcode are now looking at an average cost of just £97.57, the only area coming in under 100. This is £15.85 cheaper than last year, and 35% less than winter 2010/11.
Those in NW London postcodes have experienced the biggest overall reduction (18%) in premium price for new customers year on year, although the rates in this part of the capital are still over £30 above the national average. Similarly, West London postcodes recorded an almost 14% year on year reduction in the price of home cover for new customers this winter, but average premiums are still almost £20 above average. The list of the regions with the top savings over the past year are as follows:
Kevin Pratt insurance expert at MoneySuperMarket said: “Not all of the top 10 regional winners are seeing premiums below the national average, but the rate at which prices are falling in these areas for customers who shop around is really promising.”
On the downside, however, homeowners in Northern Ireland have pulled the short straw: their BT postcode is the only one in the UK where an uplift in price has been recorded year on year. Sorry folks.
Telematics- the black box that can be fitted to cars- are already A Thing, but for most people, the decision of whether or not to subject your driving to such scrutiny is a voluntary one. However, increasingly drivers under 25 are being ‘encouraged’ to install a system or face the consequences of higher insurance premiums. But some insurers are even installing systems that will grass you up to your mum if you exceed the speed limit.
The new technology not only tracks youngsters’ every move behind the wheel, but texts their parents if it thinks they have broken the speed limit, or are braking too quickly, for example. Insurers claim this is all kosher because parents, who often cough up to fund their child’s car, have more influence over their child’s driving habits than the insurer.
“We contact parents, as well as phone call, text and update a driver’s online account if they don’t drive safely,” Crispin Moger of specialist insurer Marmalade told the Telegraph, adding “We involve parents as we don’t want young drivers to ignore messages we send them, although we can withdraw the policy if they keep driving badly.”
Other insurers will only tell parents if they have bought the policy. Steve Kerrigan of The Co-operative Insurance, who have shopped 1,500drivers for speeding since installing telematics four years ago think the system offers “reassurance to parents who can ‘see’ their children when they are out on the road and otherwise on their own.”
Some firms work by reducing premiums for drivers who agree to have telematics installed, others offer discounts for good driving behaviour, like More Than, who offer a discount of up to 2.5% after every three month review or the Co-Op who assess driving every 90 days and when the premium will either go up by 20%, or be discounted by 30%. Marmalade just slap you with a £250 penalty for bad driving as “if it was just a £10 increase then people would ignore it.”
But of course these telematics are entirely optional. You can choose to pay up to £1000 extra for a non-monitored policy. The average increase for More Than customers is around £750, and premiums are 25% higher with Direct Line than if you concede to having a black box.
But is telematics going to be forced on to the rest of us? On a purely market-led basis, the answer would be no as the eye-watering prices levied on young drivers- who are twice as likely to have an accident than the over 60s- are what makes the cost of installing a system worthwhile for the insurer.
There are cheaper options though- some insurers offer an app that can track your driving an earn you a discount, although these systems aren’t without their issues.“The difficulty with an app-based product is the potential for fraud – you could switch your phone off or give it to your gran,” said Graeme Trudgill of the British Insurance Brokers’ Association, with uncharacteristic common sense.
But chances are that we will all be driving cars with telematics in the future as from 2017, all new cars will have black boxes installed, as part of new EU targets. The “eCall” project says that, in two years, all new cars made or sold in the EU should have a telematics device that can transmit data to insurers and call the emergency services in the event of a crash.
So is this a good thing? Surely once Big Brother is watching all of us, premiums will be weighted towards those more likely to cause an accident and safer drivers will benefit from cheaper premiums. In theory anyway…
Good news for consumers but bad news for insurance companies- the FCA has today announced plans to ban ‘opt-out selling’, which is where insurers handily pre-tick boxes offering you additional products and services, over concerns that customers were paying high prices for things they didn’t want or need. A triumph of common sense.
The FCA ran a study into the general insurance add-ons industry last year, which concluded that opt-out selling often results in “consumers purchasing products that were of poor value and not what they needed.” The FCA also found that the value of general insurance products “is not always clear,” with some consumers are not even aware they have bought an add-on.
The FCA is concerned that consumers “are not able to make an informed decision on whether they need or want” the extras being foisted on to insurance purchasers. As part of the review, the FCA also wants firms to provide consumers with “more appropriate and timely information” to help them identify if they even want an add-on at all, and if so, which is the most appropriate and most cost-effective option for them.
The FCA plans to introduce guidance encouraging insurers to raise the issue of the most common add-ons to consumers earlier in the sales process, while also making it easier to compare alternatives, specifically recommending that firms provide the annual price of add-ons rather than just giving the smaller monthly figures in a shameless attempt to make the overall cost look smaller.
Christopher Woolard, Director of Strategy and Competition said, categorically, “this is about ensuring consumers can make the right decision on what add-on insurance they do or don’t need. Forgetting to un-tick a box at the end of a purchase is not making an informed choice.”
“Our work shows that the opt-out model means too often consumers are buying a product when they have not been able to give any thought to whether or not they need it,” he continued, citing the familiar example of consumers having to double check whether or not they have accidentally agreed to buy an add-on insurance product when buying car insurance or tickets online, for example.
“These proposals will mean that consumers will be in a better position to decide what they want and consider the options available to them. Fewer consumers will end up with products they didn’t want or don’t even know they own,” he finished, with a flourish.
The proposed ban would apply to any add-on sales of regulated or unregulated products offered alongside financial primary products, which would include the almost industry-standard add ons of legal expenses sold with home or car insurance, breakdown or key cover sold alongside motor insurance, or protection cover when taking out a mortgage or credit card.
The consultation period ends on 25 June 2015.
Of course, we’re being sarcastic and whiplash claims have, according to a report from one insurer, hit record levels.
The result of all this is that on average, motorists are getting £93 added to their motor insurance premium. So, thanks to people with no neck ache, everyone else is paying for it. Nothing new, but galling all the same.
So what’s brought these new levels about? Well, once again, we can thank the no-win no-fee law firms who have been drumming up business on daytime TV and doing very well for themselves.
Aviva reckons that, despite the best efforts of the government to sort out compensation culture and lower motor insurance costs, more needs to be done if there’s going to be any reduction in whiplash claims. According to their figures, whiplash is costing drivers as a whole, £2.5bn a year. Their research also showed that the UK is on course to bring in advance of 840,000 motor injury claims to the Claims Portal, which allows insurers to submit claims, for the year ending April 2015.
Last year, 80% of motor injury claims included whiplash. Compare that to France where it only makes up 3% of injury claims, and you can see that something’s awry.
The PPI debacle has become one of the most shameful episodes in British banking of the last ten years. And there’s quite a range of knobbery to select from.
A whopping £17.3 billion has now been paid out, after PPI was ruled to be an utterly despicable piece of mis-selling, often with no actual thought as to whether the customer could pay it back or not.
Payment Protection Insurance or PPI, was meant to protect borrowers in the event of sickness or unemployment, but were often sold to those who would have been ineligible to claim.
The Financial Conduct Authority (FCA) said it would use its findings, due to be published in the summer, to assess if the current approach to compensating customers is working properly. Because there just hasn’t been enough money squandered on this.
The FCA said in a statement: “The FCA will then consider whether further interventions may be appropriate, which could include a consumer communication campaign; a possible time limit on complaints; or other rule changes or guidance, or whether the continuation of the PPI scheme in its current form best meets its objectives,”
“While this work continues, the FCA expects firms to continue to deal with PPI complaints in accordance with our requirements,”
Banks such as Lloyds, Barclays, HSBC and Royal Bank of Scotland have already set aside £24 billion to compensate consumers, with many of them wiping off the entire debt of customers
Since 2011, the banks have dealt with over 14 million complaints about PPI, and have got to around 70% of customers paid back.
There’s still around 4,000 complaints coming through the banks each week about PPI, so even if you have the slightest doubt, get in touch with them.
Honestly, you can’t trust anyone these days.
On the back of Nationwide’s existing-customer-only top mortgage deal yesterday, now calls are out for the FCA to investigate motor insurers save their best rates for new customers to the detriment of loyal drivers.
Speaking to the Insurance Times, Ian Hughes, Chief Executive of Consumer Intelligence, questioned the practice of offering discounted premiums to new customers but not to existing clients. “Is it a fair outcome that a customer that has been with you for six years could, for instance, get a premium that is half what they are currently paying if they were a new customer?” he asked, plaintively.
Mr Hughes is firmly on the side of the fence that says it is not fair, calling on the FCA to examine new business discounts as part of its focus on ensuring fair outcomes for customers. And he’s got a point, particularly as changing insurer every year is more difficult for certain groups of consumers.
But he doesn’t take the soft option and blame the comparison sites, as after all, that’s the way many people seek out the lowest renewal premium. Hughes lays the blame squarely at the door of the insurers themselves:
“A lot of people try to put the blame at the door of price comparison sites, but they are not to blame for this problem. This problem is created by introductory discounts – by giving your best prices to your least loyal customers.”
However, despite calling for FCA intervention, what Hughes is really hoping for is that the insurance industry will see the error of its ways and change policy before being forced to act by the regulator.
He said: “It is always my hope that the industry can be grown up enough that it can recognise and fix its own failings. When a regulator has to step in, nine times out of 10 that creates issues and challenges all of its own.”
But are the insurers really going to change? Surely it only needs one pioneering insurer to set the ball rolling in the looking-after-existing-customer stakes? Unfortunately not. “The problem is that if any one company starts to try and address the problem then, unfortunately, they will lose a lot of business,” warns Hughes. “No one company can fix this by themselves. It needs to be corrected as an industry and that is a big challenge.”
So is a self-correcting insurance market just pie in the sky? Looks like we will have to wait for regulatory interference before we can all stop chasing new deals every year. Besides- if your insurer told you they were changing strategy and were offering you, their existing customer, their best prices, would you believe them anyway?
Car insurance is compulsory, so once a year you have to find the spare cash to insure your car for another year (making sure you shop around at that time to find the best deal). In recent times, of course, it has been possible to pay for your insurance monthly, convenient for people paid monthly, but it seems that some insurers are trying to cream extra profits out of poor instalments payers- by charging extra on top of additional interest charges.
In an ideal world, insurance companies would allow you to spread the cost of your annual insurance over the months you use it free of charge. Unfortunately these are insurance companies we are talking about, so there is generally an interest charge for spreading the payments- although it’s always worth checking what this is, as the rates can vary wildly between providers. However, a new Which!!! investigation has discovered that, in addition to interest charges, some insurers are charging monthly customers more just because they can.
The offending insurers are the Admiral group of companies, which includes the Elephant and Diamond brands, who are using this double-dip approach to effectively charge monthly customers twice for paying monthly. By comparing the annualised monthly and the one-off annual insurance cost on a number of vehicles, Which!!! found that the difference could be as much as £145.
The examples found by Which!!! include a quote with Elephant.co.uk for a 25-year-old Toyota driver, where the annual premium was £594.66. Without including a charge for interest, however, when selecting a pay monthly premium, the cost rose to £642.36. Interest was then added on top of the inflated premium, bringing the full cost over a year to £702.35. That’s £108 more for paying monthly.
Of course, the insurer would never admit to charging people more for anything. Instead what they are actually doing is offering single-payment customers a ‘discount’ from the standard price. Of course they are. Which!!! found that these ‘discounts’ varied considerably depending on the scenario and insurer. For the Toyota driver above they ranged from £44.52 to £47.70, while for a 30-year-old Audi owner they were as little as £2.12 with Diamond and Elephant, and £8.48 with Admiral. In the worst case, Which!!! found a difference between one-off and monthly premiums of £145.22 on a quote for a Ford Focus Zetec, insured with Admiral.
Which!!! say they “don’t think [insurers] should be attempting to make a second profit on customers” who don’t have the funds, or who simply choose to pay their premiums monthly. We agree, although capitalist society can’t blame the insurance companies for trying. What’s clear is that if you do check quotes at renewal, you are likely to find a cheaper monthly premium by selecting an insurer who doesn’t bump up the prices.
Admiral declined to comment owing to “commercial sensitivity.”
No-one likes insurance companies. Not even their mothers. So how can insurance companies make themselves even more odious? By engaging in the severely-frowned-upon practice of making abandoned or ‘ghost’ calls to older adults, that’s how.
Specialist over-50s* insurer Ageas was investigated by telecoms regulator OfCom who found that they made 148 abandoned calls over three separate days during a seven-week period of investigation. This breached the maximum of 3% of all calls made and the company was fined £10,000 for their misdemeanors. That’s almost £70 per wasted call.
Nevertheless, Ofcom considers this to be a small fine, as it considered the “degree of seriousness and harm to consumers was at the lower end of the scale.” Ageas was found to have been in breach of legislation relating to “persistent misuse of a telephone network or service.” The fine also reflects the company’s offer of a £10 shopping voucher to affected consumers and the steps it has taken to bring itself into compliance. Presumably by ceasing and desisting.
Claudio Pollack, Ofcom’s Consumer and Content Group Director, said: “The law is there to protect consumers from suffering annoyance, inconvenience or anxiety, including from abandoned calls.”
“Organisations using call centres must comply with the law or face the consequences. Where we find breaches, even at the lower end of the scale, we can take action” he finished.
However, Ofcom itself is not finished, as it has also announced a review of its ‘persistent misuse’ policy.
The existing policy identifies silent and abandoned calls as two examples of misuse, although we are sure that Bitterwallet readers could come up with many more examples. Ofcom’s policy also describes steps organisations can take to avoid making them and how to reduce consumer harm where they do occur.
However, Ofcom want to know if this could be better and is asking for initial views on what, if any, changes could be made to:
help make enforcement more efficient and effective;
reflect technological developments or other changes in the call centre industry; or
clarify the policy to make it easier for companies to understand and follow. We don’t think “stop bothering people” is particularly hard to understand, but perhaps you have some simple suggestions on how to reinforce this message. To idiots.
Responses need to be submitted to Ofcom by 7 November 2014.
*that’s older than I am
Things are getting shaken-up in the world of car insurance. Does it mean cheaper car insurance for all? Of course it doesn’t. Did you have glue for your breakfast this morning because that’s a stupid thing to think.
Basically, the Competition and Markets Authority (CMA from now on) have said that exclusive pricing deals between motor insurers and price comparison websites need to be banned. Basically, because of these deals, insurers are being denied the chance to make their products available for cheaper, elsewhere.
The CMA also noted that consumers need better information on no-claims bonus protection insurance.
This review came about after the Office of Fair Trading asked the CMA to get stuck into the motor insurance market, and after a year of weighing things up, this is what the CMA have come up with.
They say that, because of the deals being struck between insurers and price comparison websites, it is pushing the price of premiums up across the board.
“They certainly help motorists look for the best deal, but we want to see an end to clauses which restrict an insurer’s ability to price its products differently on different online channels,” said CMA deputy panel chairman Alasdair Smith.
The CMA also tossed some work to the Financial Conduct Authority who should be examining how insurers tell consumers about add-on products to car insurance policies and the like.
“The way motor insurance-related add-on products are sold makes it hard for consumers to obtain the best value,” Smith added, with no-claims bonus protection being a particular concern: ”We are requiring insurers to provide much better information.”
Alas, the CMA said that they weren’t able to work a way around the problem of high car hire and repair charges for drivers who were not at fault in an accident.
Fixing that, they say, would require a “fundamental change in the law”.
Sensible travellers know that, when you go abroad, in addition to your EHIC if travelling in Europe*, you make sure you get travel insurance with medical cover because, after all, anyone can have an accident. However, the Financial Ombudsman has noted a growing trend for insurers to refuse to pay out at all if there has been alcohol consumed – even if that is as little as two or three drinks.
While travel insurance cases make up only 2% of the Financial Ombudsman’s work, insurers seems to be getting cheekier with the amount of cases upheld by the Ombudsman rising from 42% to 53% last year. And many of the cases involve a denial of relief, owing to alcohol consumption.
The reason many health claims on travel insurance are denied is because of undisclosed previous medical conditions, and failure to inform an insurer of alcoholism could fall under that category. However, the Ombudsman is now seeing cases denied on the grounds of “alcohol abuse” or “excessive alcohol consumption”, terms which are often undefined and therefore open to the insurer’s interpretation.
Some examples given by the Ombudsman include a woman who needed stitches after banging her head on a bedside table whilst on holiday in Greece. She freely admitted to having drunk two or three drinks over the course of the evening, which rendered her blood alcohol level over the legal limit for driving in the UK. The insurer claimed the injury was as a result of excessive drinking, although they had not defined what ‘excessive’ might be. The Ombudsman felt that two or three drinks over a long evening whilst on holiday and not intending to drive was not, in fact, excessive, and that “people can be clumsy and have accidents even when they’re sober.”
They also found that insurance companies make assumptions, based on age and location. A young man in his twenties was admitted to hospital after collapsing while out at a popular European resort. The reason assumed by the doctor was given as alcohol consumption, so the insurer rejected the claim for medical expenses on the grounds that they had arisen “directly or indirectly from using alcohol”.
However, the Ombudsman does not think it is reasonable for any insurer to assume people will not drink at all on holiday, so the onus was to show whether the admission was caused by alcohol, not merely incidental to it. The medical evidence showed that the young man in question had, in fact, drunk less than the UK driving limit on the night in question, and that an alternative explanation for his collapse could have been down to dehydration. His claim was upheld.
Although, ideally, insurance companies would just settle reasonable claims, it is important to know that the Ombudsman requires the insurance company to prove that an exclusion applies (eg for excessive alcohol consumption), it is not down to the traveller to prove it does not apply. But nor does the Ombudsman uphold every case. Cases that have required hospital treatment to treat alcohol withdrawal were upheld in the insurer’s favour, as the claim clearly resulted from alcoholism notwithstanding the fact that no alcohol had been consumed on holiday. Another case where a traveller sadly died while falling down the stairs was also found in favour of the insurance company when post mortem tests showed blood alcohol levels were sufficient to have caused “severe ‘ataxia’ (problems with balance and coordination) and poor judgement.”
So next time you get blasted on holiday, check your policy exclusions and make sure you don’t injure yourself, or those fishbowls could end up costing more €uros than you thought…
*European Health Insurance Card, previously known as E111. Link to get a free card for the uninitiated is here