Insurance claim rejected: why it happens and what you can do

If your insurer refuses a claim, or offers less than you expected, you have a right to complain, and many refusals can be challenged. Start by asking for the reason in writing and checking it against your policy wording. Then make a formal complaint to the insurer.

The insurer has up to 8 weeks to send a final response. If it doesn't, or you disagree with its answer, you can take the complaint to the Financial Ombudsman Service. It is free, and you generally have 6 months from the date of the final response to do so.

The rules insurers must follow

Insurers aren't free to refuse claims as they like. FCA rules (ICOBS 8.1) require an insurer to:

• handle claims promptly and fairly
• give reasonable guidance to help you claim, and information on its progress
• not unreasonably reject a claim, including by cancelling or avoiding the policy
• settle claims promptly once the terms are agreed

The FCA's Consumer Duty also applies. It came into force for open products on 31 July 2023 and for closed products on 31 July 2024. It requires firms to act in good faith, avoid causing foreseeable harm and support customers to pursue their financial objectives. Its four outcomes are products and services, price and value, consumer understanding, and consumer support.

Why claims get refused

MoneyHelper sets out the most common reasons. Some are fair; some are worth challenging.

Mistakes or gaps in what you told the insurer

If information you gave when buying the policy was wrong or incomplete, the insurer may refuse or reduce a claim. But the law limits what it can do. Under the Consumer Insurance (Disclosure and Representations) Act 2012, your duty is to take reasonable care not to make a misrepresentation. The insurer only has a remedy for a "qualifying misrepresentation", where you didn't take reasonable care and the insurer would not have offered the same deal had it known.

What happens next depends on what kind of mistake it was:

The Financial Ombudsman Service gives this illustration of a proportionate payout: if you paid £75 a month but should have paid £100, the insurer may only have to pay 75% of the claim.

MoneyHelper also notes that an insurer can't reject your claim if you took reasonable care to answer its questions honestly and to the best of your knowledge. If the insurer didn't ask about something, write that down.

The insurer says you didn't take reasonable care

Many policies have a "reasonable care" clause, for example about leaving valuables on show or keys in a car. These are often disputed. In motor theft cases, for example, the Financial Ombudsman Service says it needs evidence that a customer recognised there was a risk before it is fair to apply a reasonable care exclusion.

Policy conditions and technical points

Insurers sometimes rely on small-print points, such as whether an item was used for business. The ombudsman doesn't consider it good practice to refuse a claim where a breach of a policy condition was only technical and not connected to the circumstances of the claim.

Not following the claims process

MoneyHelper notes that insurers often expect customers to follow the claims process to the letter, and may use a failure to do so as a reason to refuse. Keep a record of when and how you reported the claim, and get approval in writing before starting repairs where the policy requires it.

Paying only part of the claim

This often happens because of underinsurance, where the sum insured was too low, or because of an excess or a policy limit. See our home insurance guide for how the ombudsman treats underinsurance and the average clause.

Exclusions

Wear and tear, gradual damage, pre-existing medical conditions in travel and pet cover, and using a vehicle outside its class of use are common exclusions. An exclusion that wasn't made clear when you bought the policy may be open to challenge: the ombudsman expects significant exclusions, such as keys-in-vehicle clauses, to have been clearly drawn to your attention.

How to complain, step by step

1. Get the reason in writing. Ask the insurer to explain exactly which policy term it relies on.
2. Read your policy documents. Find the wording that says you are covered and the wording the insurer relies on. Note anything ambiguous or unclear. MoneyHelper says insurers must give clear information and a reasonable explanation for refusing.
3. Check what you were asked. Find your application, statement of fact or renewal documents. Did the insurer actually ask about the thing it now says you should have mentioned?
4. Gather evidence. Photos, receipts, reports, correspondence, call notes, and any independent opinion.
5. Complain formally. Write to the insurer's complaints team, mark it "complaint", include your policy number, explain why you think the decision is wrong, and say what you want it to do. If you bought through a broker, it may help make the complaint.
6. Wait up to 8 weeks. The insurer should send a final response within 8 weeks. It should tell you about your right to go to the ombudsman.
7. Refer to the ombudsman. If you are unhappy with the final response, or 8 weeks have passed, complete the ombudsman's complaint form and send a copy of the final response letter.

Independent help with property claims

If the dispute is technical, such as wear and tear versus accidental damage, MoneyHelper suggests an independent report can help. A loss assessor works for you and charges a fee; a loss adjuster works for the insurer.

The Financial Ombudsman Service

The ombudsman is free and independent. It looks at both sides and decides what is fair and reasonable. If it finds a claim was wrongly refused, it can tell the insurer to pay the claim, pay compensation, apologise or explain.

Time limits

• 6 months from the date on the final response to bring your complaint to the ombudsman
• 6 years from the problem happening, or 3 years from when you became aware, or ought reasonably to have become aware, that you had cause to complain, for complaining to the business in the first place

Late complaints may be accepted in exceptional circumstances, such as serious illness, or if the business didn't send a proper final response.

Award limits. For complaints referred on or after 1 April 2026, the maximum award is £455,000 for acts or omissions on or after 1 April 2019, and £205,000 for those before that date.

You don't need a representative. A claims management company may charge a share of any compensation; MoneyHelper notes that friends, family or Citizens Advice can help instead.

Going to court instead

The ombudsman isn't your only option. In Scotland, claims worth £5,000 or less generally use simple procedure in the sheriff court, which is designed to be quick and informal. In England and Wales, the small claims track generally deals with claims up to £10,000. Court involves fees and formal procedures. A solicitor can explain how the court route compares with going to the ombudsman.

What to check in your policy

• The exact clause the insurer relies on, and whether its wording is clear
• Your statement of fact or application: the questions asked and your answers
• Definitions of key words such as "accidental damage", "unoccupied", "pre-existing condition" or "class of use"
• Claims conditions: notification deadlines and approval requirements
• Sum insured, limits and excesses that reduce the payout
• Reasonable care and security conditions
• Complaints procedure set out in the policy booklet

When to get help

MoneyHelper offers free guidance on insurance complaints, and the ombudsman says you don't need to pay anyone to represent you. For large or complex claims, or if you are thinking about court, a solicitor can advise on your position, including on the differences in Scots law and court procedure.

This guide is general information about how insurance works in the UK. It isn't advice and doesn't take your circumstances into account. Policies differ: your own policy documents are what count.