Accident & Illness insurance - making it up as they go along!!!

edited 30 November -1 at 1:00AM in Insurance & Life Assurance
3 replies 615 views
kath2geoff1kath2geoff1 Forumite
2 Posts
edited 30 November -1 at 1:00AM in Insurance & Life Assurance
My husband is self employed and has insurance cover to cover accidents and illness on his home & business policy. He had a complete nervous breakdown last December and has claimed under that part of his policy for a monthly sum to pay someone to carry on his work in the business. The policy is up for renewal in June and we have received a letter from the insurance company, stating that due to the claims experience, renewal terms will not include mental and psychiatric illness from renewal.

Is this allowed? Is an insurance company allowed to change the goalposts as and when they wish, so they can wriggle out of paying out on something that they have charged premiums to cover for years gone by?

Can anyone offer any advice as to how we can fight this decision, as my husband is unlikely to recover before the insurance has to be renewed, which will mean his business will most likely go under.

Has anyone else had similar problems with insurance companies?

Kath

Replies

  • MarkyMarkDMarkyMarkD Forumite
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    There's a difference between annually renewable policies and ongoing policies in this regard.

    If you have an ongoing policy, like a life & critical illness or an income protection policy, claiming on the policy is unlikely to impact on your premium or your ability to obtain cover.

    But if you have an annually renewable policy, every insurer is able to change the terms of the deal at renewal.

    The best analogy is a car insurance policy - if you have an accident and claim for it, most insurers will charge you more on renewal.

    With something like a medical condition, insurers will either load the premium at renewal or, quite likely and as in your husband's case, simply exclude liability for similar claims in future.

    I don't see why you think it's not allowed. Your husband's past premiums covered the risk in the past - they don't guarantee insurability in the future.

    But, your husband's current claim should not be affected - if it provided for 12 months' cover*, for example, then that 12 months will continue whether or not you renew the policy. So I'm not sure that the inability to renew will affect the business's ability to continue.

    * And I'm presuming that most policies of this type won't provide for indefinite replacement of the key worker.
  • dunstonhdunstonh Forumite
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    Your husband hasnt got a proper income protection policy. These are known as permanent health insurance and the insurer cannot play around with it once it is in force.

    It sounds like you have a general insurance policy similar to a accident sickness and unemployment. These are generally lower quality and unfortunately, you do get what you pay for when you want income protection.
    Has anyone else had similar problems with insurance companies?

    Its not a problem with the insurance company. Your husband just has the wrong type of policy.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • :T
    To MarkyMarkD

    Thanks for the info I really appreciate it. I didn't tell my husband as it would make him more ill, but following your advice about 'it shouldn't affect his claim' I have found out from the policy that it will run for 104 weeks, which is great, (surely he will be better by then!!) So I think it will be OK

    Thanks,

    Yours, demented Kath
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