Complete Guide to Insurance Claim Disputes & FOS Complaints
When insurers reject or underpay claims, you have the right to challenge them. This guide explains how to dispute decisions and escalate to the Financial Ombudsman Service.
Key fact: The Financial Ombudsman Service can order insurers to pay your claim plus compensation for distress. Many rejected claims succeed on appeal.
What insurance disputes are common?
Common disputes include claims rejected on policy exclusions, claims underpaid or delayed, misrepresentation of risk, and disputes over whether a loss is covered. Insurers must justify any refusal with the policy wording.
Your rights under UK law
- Insurance: Conduct of Business rules (ICOBS): Insurers must handle claims fairly and promptly.
- Unfair Contract Terms Act 1977: Protects you from unfair policy exclusions.
- Financial Ombudsman Service: Can order insurers to pay claims and compensation.
- Limitation Act 1980: You have 6 years to bring a claim from the date of loss.
Step-by-step dispute process
- Request a detailed reason for the refusal. The insurer must provide a full written explanation with reference to policy clauses.
- Challenge the decision in writing. Explain why you believe the claim should be paid, citing policy wording.
- Request a review of the decision. Most insurers must complete this within 8 weeks.
- If still rejected, escalate to FOS. The ombudsman can order payment and compensation.
- If FOS rejects your complaint, consider legal action. For significant amounts, a court claim may succeed.
Common scenarios
Scenario 1: Claim rejected under an exclusion you didn't know about
If the exclusion is unclear or unusual, it may be unfair and unenforceable. Challenge it by explaining why you believe it should not apply.
Scenario 2: Claim underpaid
Insurers often settle for less than the loss incurred. Provide evidence (receipts, quotes, valuations) of the full loss and demand the difference.
Scenario 3: Claim delayed (over 8 weeks)
Insurers have reasonable timescales to settle. If unreasonably delayed, you can claim compensation for distress and financial loss.
Scenario 4: Misrepresentation claim
Insurers cannot reject on misrepresentation unless the misstatement was material and induced them to issue the policy. Challenge vague claims.
Key deadlines
- Report claim: As soon as loss is discovered.
- Insurer investigation: Should complete within 8 weeks.
- Internal review: Insurer must complete within 8 weeks of your request.
- FOS complaint: Must be escalated within 6 months of the insurer's final decision.
- Court claim: 6 years from the date of loss.