The worst insurers for home insurance payouts

The payout rates for home insurance cover is surprisingly low according to new data from the FCA.

The Financial Conduct Authority (FCA), the main financial regulator, has started publishing what it calls “value measures data” for a range of general insurance products.

That covers things like car insurance, home insurance and travel insurance, with the data including how frequently claims are made, the claims acceptance rate and the average payout.

While not everyone will have some of these forms of insurance ‒ you don’t need a car insurance policy if you don’t have a motor ‒ that’s not the case with home insurance.

Virtually all of us will need buildings cover or contents cover (or often both), whether we rent or own our home.

Which is why it’s so troubling that some big-name insurers turn down quite so many claims.

How often are home insurance claims approved?

First, let’s take a look at home insurance policies as a whole.

Here is how the various types of home insurance shape up when it comes to claim approvals:

Almost one in four people with a comprehensive home insurance policy are having their claims turned down.

And given the size of those claims, that’s potentially a lot of money that they are missing out on because the insurer has seen fit to dismiss the claim.

The home insurers that turn down the most claims

Of course, this is just a sector average ‒ when you dig into the stats for individual insurers, the rates are even more striking.

Here is what you can expect from household names when it comes to home insurance, looking solely at combined policies.

Hiscox for example paid out almost every single claim, yet Ageas paid out less than four in ten claims.

There is a similarly low payout rate at certain smaller insurance names too, like QIC Europe and Qmetric.

Why are home insurance claims being turned down?

Insurers have been quick to question just how reliable these figures are.

For example, they have suggested that the FCA data includes things like when a customer contacts them to check if something is covered by their policy, or even if they have called in error because they hold a policy with a different insurer.

But even taking that into account, there are evidently still plenty of cases where someone believes they are entitled to money from their insurer only to find that their claim is declined.

There are various reasons why that might be the case, such as having provided inaccurate information when taking out the policy, or because you have not taken ‘reasonable care’ to reduce the chances of having to make a claim, such as leaving your windows open when leaving the house.

What does the FCA think?

The FCA said that it is “concerned” about how the data “appears to compare” with insurers stating that virtually all of their products provide fair value.

In other words, it believes that these poor uphold rates suggest that ‒ at least in some cases ‒ people are being ripped off.

The regulator said that it will be closely analysing the next batch of data, which is due next month, as well as “testing the robustness” of the oversight and governance at insurers, including how they assess whether their products offer fair value.

It strikes me that the regulator is using this as a way to give insurers warning that they need to do a better job at providing insurance products we can actually rely on, rather than paying out for expensive cover which lets us down when we most need it.

We don’t know what we are paying for

However, there is another issue at play here. All too often many of us sign up for policies without truly understanding what is covered, and what our policy does.

That’s understandable to some degree ‒ insurance policy documents are massive, and most of us choose not to read through them in any great detail when purchasing a policy.

It’s little wonder then that we end up trying to make a claim, only to discover that our issue isn’t actually covered.

Clearly, we need insurers to do a better job of explaining their policies in clear ‒ and concise ‒ English, while us policyholders need to take the time to get a better idea of exactly what we are paying for.