Rachel Lam, Ombudsman Leader and Head of Practice for motor insurance, outlines some of the issues we’ve seen recently in complaints about motor insurance claims.
She highlights two areas where we see consumers impacted significantly; declined claims following theft by deception and declined claims after a vehicle has been modified.
In the last few months, we’ve seen an increase in enquiries from people who have had their car or van stolen, their insurer has rejected their claim, and they don’t think it is fair given the size and impact of the claim.
With the cost of living crisis, the impact of a declined insurance claim for a stolen vehicle can have an even greater impact. We are seeing more cases which involve examples of deception we’ve not seen before, and we are also seeing an increase in situations where someone has modified their van, making it more attractive to a thief.
Here are some examples:
- a car that’s been stolen after the thief steals a key without the owner being aware. This often involves the thief pretending to be a potential buyer and switching the owner’s key with a similar one, then returning to steal the car.
- a van that’s stolen after it’s been modified by the owner, which may have made it more valuable and attractive to a thief, but where the owner hadn’t informed their insurer about the modifications
I wanted to highlight these cases because often we can’t uphold these complaints. Theft by deception is sometimes specifically excluded in the policy terms and conditions, and consumers are usually required to inform their insurer if they make modifications to their car or van.
So it’s important customers check policy wording carefully, and know what a policy does and doesn’t cover.
Claims and complaints after a theft by deception
Insurance policies don’t always provide cover for this type of theft. Theft by deception is sometimes specifically excluded in the policy terms and conditions. So, when people decide to sell their car privately, it can be a risk that they take on without realising it.
If you are going to try to sell your car yourself, there are some things you can do to help avoid this type of theft from happening, for example:
- never leave your vehicle open and unattended during a sale
- think about how you will handle a request from a buyer to test drive the vehicle
- check the buyer’s driving licence and insurance documents
- check the buyer has given you the agreed amount of money before handing over the car keys
- when showing the car to a potential buyer, don’t leave a key for the car unattended or let it out of your sight
We are starting to see more sophisticated theft by deception, such as the theft of the key.
If, unfortunately, you are caught out by this type of vehicle theft and think your insurer has treated you unfairly, or hasn’t considered your claim properly, then we can investigate a complaint.
When we investigate a complaint about this, we’ll check what the policy says and what type of cover is offered. We might agree it’s fair for an insurer to turn down a claim if we can see that the control of the vehicle was voluntarily handed over to someone else.
It’s unlikely that we’ll uphold your complaint if the insurer has applied the terms and conditions fairly and reasonably or has evidence that you didn’t do enough to guard against your car being stolen.
Theft of a modified van
We are also seeing an increase in complaints from consumers who are unhappy that their insurance company won’t pay out on their claim for a stolen van because the van has been modified.
Modifications cover a range of things. It can include simple things like changing alloy wheels or, more complex changes, such as adding a new interior to the van so you can travel or sleep in it. It could also be that you’ve completely converted your van for another use, such as using it to run a business, for example using it for your mobile dog grooming business.
There are usually specific terms or conditions you need to follow if you want to modify a vehicle, to make sure your insurance cover remains valid.
Whatever changes you’re considering making to your van, it’s important that you inform your insurer as soon as possible. If you make a claim without notifying your insurer about any significant changes, your policy may be invalid because the insurer might say that the modifications mean that:
- your van is at a higher risk of being stolen
- they would have increased your premium if they’d known about the modification
- they wouldn’t have continued to provide cover for your van if they had known about the modification
If you bring a complaint to us, we’ll consider all the facts and evidence of the case. We’ll look at the policy wording to decide if you’ve been treated unfairly.
However, if you haven’t told your insurer about any significant modifications you’ve made and it’s clear in the policy that you should have done so, then it’s unlikely we’ll uphold your complaint.
Guidance for insurers
If you’re an insurer dealing with a claim or complaint about this, you should think carefully about whether your policy wording gives you the right to decline the claim. You can find more specific and detailed guidance about how we resolve complaints about this in the motor insurance section of our website.
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