During your application process, insurers will ask you a series of questions in order to get an understanding of the risk you would pose if they were to insure you. Customers can be deemed as ‘high risk’ for a variety of reasons, from their location to their existing claims rate.
It’s for this reason that some insurers can refuse to offer certain policies, either across the board or specifically to certain customers.
Full Disclosure
It’s worth noting to begin with that your chances of getting reasonably priced insurance can be heavily affected by a wide variety of personal factors. With this in mind, it’s understandable that you may be reluctant to disclose the full truth when you apply for your insurance.
In situations like this, it’s better to be completely forthcoming and honest. You should attempt to answer all of the questions your insurer asks you as accurately as you can, without exaggerating or neglecting any details.
If your insurer finds out that you’ve not been completely honest in your application process, they may invalidate your policy, and this will have a very negative effect on your chances of taking out other insurance policies moving forward.
Credit History
One factor that can have a grave effect on whether or not your insurer will offer you cover is your credit history. Missing credit card payments and overdue bills can ward off potential insurance companies who may deem you ‘irresponsible’ and thus, this will become a real problem when it comes to securing a suitable policy.
Low credit scores can prove disastrous when it comes to acquiring cover, so be sure to stay on top of your bill payments and other finances. Companies like Equifax and Experian offer a free trial of their credit software on their sites, which will provide you with a credit report, as well as offer advice on how to increase your score.
One sure-fire way to improve your credit rating is to pay off any outstanding debts you may have and ensure that all your bills are being sent to your current (and correct) address. For more advice on managing your credit score, you can visit sites such as Money Saving Expert, who offer a wealth of resourceful free finance advice.
State of Health
Insurers have to take the state of both your physical and mental health into account when offering their policies. Any known pre-existing health conditions will have to be declared upfront when you apply for a policy.
If you discover a long-standing health risk after you’ve already taken out cover, then you should contact your insurer and inform them immediately, as it may affect your cover. Whilst answering ‘yes’ to having a condition or physical health problems on your insurance forms may put you in the high-risk category, there is still a good chance you’ll be able to find cover. Anti-discrimination laws in the UK mean that your insurer could be acting illegally if they refuse or raise the price of cover if you claim to have health problems.
The Equality Act 2010 was brought in (and recently amended) in order to quell the illegal mistreatment and discrimination of those who are disabled. Insurers are welcome to ask about your physical and mental health state, but if you are treated differently without a valid reason then you may have grounds to seek legal advice.
It is obviously up to insurers to act responsibly when offering and setting the price of their policies, so there may be instances when they are forced to refuse policies without breaking the law. If you are unable to care for yourself for example, insurers may refuse to cover you until certain criteria are met. This is obviously a highly sensitive and complicated area of the law, and if you feel you’re unable to negotiate properly with your insurer then you should certainly seek help from your broker. For the most up-to-date information on the Equality Act 2010, visit the Government Home Office site.
If you are worried about being refused a policy because you suffer from a mental illness then there are information lines available for you to contact for advice. Mental health charity Mind offers free guidance and support, both online and offline, to anyone looking for more information on how to cope living with a mental illness. Visit their site for more information or to find your nearest branch.
Location
Your location can have one of the biggest impacts on whether or not an insurer will offer you a policy. There are two major factors of your location that can affect your insurer’s decision: the crime rate and the risk of severe weather or flooding.
Crime Rate
Insurers will look to corporate and government reports to better understand the crime statistics of each area in the UK that they cover. Those areas with higher crime rates will be deemed much higher risk than those without.
If you’re worried that your area may be prone to high crime rates, the Home Office offer plenty of free information and regularly updated crime statistics on their website. Statistics show that areas such as Croydon, Manchester and Birmingham are the most dangerous areas to live [Source: http://www.homeoffice.gov.uk/publications/science-research-statistics/research-statistics/crime-research/hosb0112/hosb0112?view=Binary] and so are more likely to be considered high risk by insurance companies. Those looking for safer areas should move towards Berkshire or Devon, as both have been voted to be in the top 10 safest places to Live in Britain. [Source: http://www.familyinvestments.co.uk/hotspots/]
This isn’t a guarantee of safety though, nor is it a guarantee that insurers will offer you a policy. If the insurance company notice a significant spike in crime around your area, they may re-evaluate the details of your policy when it comes round to renewal time. If your area has become too high-risk, they may refuse to renew the policy all-together.
Flooding
Severe weather and flooding are obviously two of nature’s greatest disasters, and anyone that lives with areas prone to high levels of either may find it incredibly hard to get an insurance policy.
Reports have shown that areas such as Skegness, Windsor and Weybridge are the most prone to flooding. If you’re worried about flooding in your area, then you can find advice and information on flooding in the UK, including a detailed flood risk map, by visiting the Environmental Agencies’ website.
Flooding is becoming an almost common occurrence for some, with over 200,000 homes now at risk. [Source: http://www.bbc.co.uk/news/business-16794696]. Because of this, the Association of British Insurers (ABI) have made it so that insurance companies who work with them are obliged to offer proper cover to people living in the areas with a high risk of flooding.
This agreement is due to be re-evaluated this year, so if it is not renewed it may become much harder for people in these areas to find cover. Nick Starling, Director of General Insurance at the ABI has gone on record stating that “Flooding is the greatest natural threat facing the UK and the risk is rising, so political consensus on how we effectively adapt to it is essential.”
There are some companies who offer flooding as part of their standard (or non-standard) cover; it’s just a matter of finding one that is suitable for your area.
This post was brought to you by Insure4Retirement, specialist insurance providers for people over 50.