What is personal accident insurance?
A personal accident policy is sold as a standalone product to an individual or an employer (as part of a group scheme), or as an add-on to other insurance, like car or travel insurance.
This type of insurance is usually sold:
- while you’re having a financial review if you’re arranging something like a mortgage
- face-to-face, during a visit to your bank
- as an automatic or optional add-on to a bank account or another insurance product
- during a cold-call
- by direct mailing
- during a sales representative’s visit to your workplace
Policies are sometimes sold with a free trial period where you need to cancel the policy if you don’t want to start paying for it.
Personal accident insurance isn’t usually sold on an advised basis. This means the seller doesn’t have to make sure the policy is suitable for your specific needs. However, you should be given enough information – which is clear, fair and not misleading – to allow you to make an informed choice about whether:
- to take out the insurance
- the insurance policy is right for you
The business that sells you the policy needs to draw your attention to any significant and unusual features of the policy – like key exclusions and restrictions on cover.
If you have a complaint about the sale of a group accident policy provided by your employer – you’ll need to ask your employer to complain to us about the sale of the policy.
Types of complaints we see
A customer might say they were mis-sold a personal accident policy because they:
- didn’t understand the policy they were applying for
- thought the policy would provide benefits in different circumstances than it actually does
- already had cover
- didn’t apply for the policy at all – it was added without their knowledge to another product they took out over the phone
Personal accident policies are specifically designed to cover disability or death caused by an accident. Because the policies are limited in what they cover, this often leads to misunderstandings. Common misunderstandings we see from customers are that they didn’t realise:
- their policy doesn’t cover them for illness or disease
- that death or bodily injury has to be caused by an accident in order for the policy to pay out
What we look at
We’ll look at all the information given to you at the point of sale including:
- product brochures
- promotional literature
- recommendation letters
- the policy summary
We’ll want to know if you had clear information about how the policy worked, and whether any key exclusions or limitations were pointed out. If the policy wasn’t clearly explained, we may conclude that the policy was mis-sold.
If you had cover elsewhere, this wouldn’t necessarily mean the policy was mis-sold – especially if the sale was non-advised. If the sale was advised, we’d also consider any other policies you had and whether the business was aware of this before it sold you the policy.
If you didn’t know you had the policy, we’d need to consider whether the business did enough to make you aware of it, and whether you agreed to the sale. We’d look at all the evidence from both sides to help us build up a picture of the sale. We’ll decide whether we think the business did enough to make sure you understood and agreed to the sale.
Your bank statements might also be helpful in this situation to see how clear your direct debit was.
How to complain
If you have a complaint about personal accident insurance, talk to your insurer first. They need to have the chance to put things right. They have to give you their final response within eight weeks for most types of complaint.
If you’re unhappy with their response, or if they don’t respond, let us know. We’ll check your complaint is something we can deal with, and if it is, we’ll investigate to understand what happened and what, if anything, went wrong.
Find out more about how to complain
Putting things right
If we think your policy has been mis-sold, our general approach is to recommend that the business put you back into the position you would have been in if they hadn’t made the mistake.
If we think you would never have bought the policy, we may recommend that your insurer cancels the policy and refunds the premiums you’ve paid, with simple interest at 8% per year. But we’ll also need to think about any claims you’ve made under the policy, before deciding how to put things right.
Sometimes, we might think a policy has been mis-sold, but we’re satisfied that you haven’t been financially disadvantaged by this. In these cases, we might consider paying compensation for any stress and inconvenience that you’ve suffered as a result of the business’s mistake.
Compensation if the policy was mis-sold
If a policy was mis-sold, we’ll usually say that the business should refund all the premiums you’ve paid, plus 8% simple interest per year, less any deductions for tax.
In some cases, we may tell the business to pay a claim as if the restriction was not part of the policy terms. This might happen if we decide that the exclusion:
- was unfair or unusual
- wasn’t brought to your attention
- meant that the policy was unsuitable for you and that you could have bought a policy elsewhere to cover your claim
We may decide that compensation should be paid either for stress and inconvenience or for the full amount of your claim under the policy.