Be Truthful While Taking Out a Policy Or Reporting a Claim

While taking a short term policy, the responsibility lies with you to provide the insurer with all the necessary information so that they can underwrite the risks. The information provided at sales stage is used to determine that the policy covers you or not by the insurer. Also they determine what premium to charge and whether the policy should be endorsed with special conditions.

The Policyholder Protection Rules requires the insurer to design their sales questionnnaire, then only they can draw out the answers required to underwrite the risk. The insurer is required to explain the purpose of questions and the claim can be rejected if you provided the incorrect information. After providing incorrect information intentionally, your insurer may pay out the claim, but is not obliged to. The Office of the Ombudsman for short-term insurance provider rejected the consumers application due to incorrect information. Also they received many complaints that the insurer rejected the consumer’s policy at sales stage.

If you misrepresent or fail to disclose material facts to the insurer, your policy may be cancelled with effect from the start date. In this event, you will be entitled to receive a refund of all premiums paid since the start date, but this is cold comfort when you are faced with a big claim such as when your vehicle is a write-off or your home burgled. Your duty to disclose does not end once the cover starts, if there is a change in material disclose you have to inform the insurer throughout the policy. You are also required to be entirely truthful about the circumstances prompting a claim submitted to the insurer for payment. The insurer needs to establish the facts surrounding the loss so as to determine its liability in terms of the policy.

Fraudulent claims are a major challenge to the short-term insurance industry. To reduce the number of fraudulent claims, insurers appoint investigators to validate high value or suspicious claims.  Though the burden of proving fraud is high, and lies with the insurer, the implications are serious. A fraudulent claim may not only result in a claim being rejected or the cancellation of a policy, but the matter may be reported to the police. To make sure that you are going in the right way, as a consumer you need to pay close attention to your insurers and provide true information.

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