Updated 15 May 2013

What happens when you make a claim

When you submit an application for insurance it goes to the underwriting department.


When you submit an application for insurance it goes to the underwriting department. This is where the risk is assessed – essentially, the underwriters will look at all the information that you have filled in on the form, and then they will compare this to their mortality tables as well as their claims experience.Based on all of this, they will offer you a premium for the cover you require.

In some cases, they may deem that the risk of a claim is too great, and they may reject your application or may apply some exclusions or restrictions to the cover. This may seem excessive or unfair but insurance only works because insurers ‘win’ more often than they lose (it is not that different to the Lotto!)

What if you lie on your application?

The loading or imposition of exclusions has tempted many to be economical with the truth when applying for insurance. It might work in the short term. You might get away with a cheaper premium or no exclusion on your policy.

But you also run the risk of a claim being partially or even completely repudiated through what is known in the industry as ‘material non-disclosure’. 

For example, many people smoke occasionally and refer to themselves as ‘social smokers’. In their minds, they smoke rarely, only when they go out for a drink with friends. This might tempt them into defining themselves as ‘non-smokers’ on their application forms. But if there were a subsequent claim and it came to light that in fact they do occasionally smoke, then the insurance company could potentially (and legally) reject your claim. 

Smoking is like pregnancy – you can’t be half-pregnant. Even one cigarette a year makes you a smoker on your insurance policy.

Don’t try to hide information from your insurance company – disclose it all and let them decide if it is important or significant.

In January to March 2010 one insurance company that I know of repudiated at least nine claims for ‘material non-disclosure’. The consequence for those claiming is usually devastating – you don’t get a second chance to die or become disabled.

(Gregg Sneddon ,  Health24, March 2011)

(Picture: insurance claim form from Shutterstock)


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