What to do if your car insurance provider won't pay out

If you’ve had a car insurance claim rejected and you want to dispute it, here’s what to do. And learn what invalidates car insurance, to help you avoid problems in the future.

If you’ve had a car insurance claim rejected and you want to dispute it, here’s what to do. And learn what invalidates car insurance, to help you avoid problems in the future.

Daniel Hutson
Head of Motor Insurance
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Posted 16 MARCH 2020

Problems with your car insurance provider

If you need to make an insurance claim, you’ll want it to be processed with a minimum of fuss, so you can get on with your life. 
But sometimes car insurance claim disputes happen. They tend to come about when someone’s expecting a pay-out, but their provider says they aren’t covered.  
There could also be disputes about who’s at fault in an accident, especially if another driver is involved and you both disagree on what happened.  
Or, if your car’s been stolen, the provider might suspect that you didn’t take enough care to stop the theft from happening. 
In these circumstances, an insurance provider might refuse to pay entirely, or offer you a smaller sum than you were expecting. 
Fortunately, there’s a formal process which can help you if you need to dispute a claim. 

What to do when your car insurance doesn’t pay: the car insurance claim dispute process

  1. The first step should always be to check your policy documents, to see if there are exclusions. Remember, all policies vary. Don’t assume that something’s covered by your insurance, just because it was on a previous provider’s policy.
  2. If your claim dismissal doesn’t explain why the claim was rejected, write to your insurance provider. Ask them for more detail on their decision and keep a hard copy of the letter/s, for your records. 

    Your letter should outline your claim circumstances, what you’d like your insurance provider to do, and when you expect them to reply. 
  3. If you’re unsatisfied with the explanation you’ve received, you can formally complain using the complaints process detailed on your insurance provider’s website, or in your insurance documents.  

  4. If you’ve tried the official complaints process and you’re still unhappy with the outcome, you can use the Financial Ombudsman Service. This is an impartial organisation which can investigate companies covered by the Financial Conduct Authority – including all insurance providers.

    After hearing your case, the Ombudsman may begin a formal investigation and their final decision is legally binding. 

What invalidates car insurance?

There’s a few reasons why your car insurance claim might be declined, or the provider agrees to pay less than expected. These include: 

  • Not disclosing information
    If you haven’t told your provider about something that affects your chances of making a claim - a past driving conviction, for example. 
  • Giving incorrect information
    If you’ve given information that isn’t 100% true, your provider could refuse a claim. An example is insurance ‘fronting', where a new driver has their car insured in a more experienced driver’s name – with themselves as a second driver.
  • Not maintaining your car 
    If an accident happens because your car isn’t roadworthy, your claim may be turned down. The same is true if an accident is caused by a lack of care by you at the wheel.  
  • Drink driving 
    If you have an accident while driving under the influence of alcohol or drugs, you will likely have any claim rejected. 
  • Not taking ‘reasonable care’ 
    Most policies say you must take reasonable care to protect your vehicle from loss or damage. If, for example, you left your keys in your car and it was stolen, you wouldn’t be covered.  
  • Theft by deception 
    If you gave the keys to your car to a potential buyer and they drove off with it, you’d probably invalidate your car insurance.  

Can a third-party claim be rejected? 

A third-party claim – when someone claims against your car insurance – can be rejected if you weren’t responsible for what happened.  
In some cases, a third-party claim is likely to be paid even if you’ve done something to invalidate your car insurance. For example, if you had an accident when drink driving and damaged someone else’s car, your insurance provider would pay up. But they’d probably try to reclaim the costs from you.  

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