Insurance nightmares: we thought we were covered

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All insurance policies have conditions under which they will or won't pay out.

Here are some common pitfalls to watch out for in health, travel, home and pet insurance.

Health insurance

Nic Hughes took out a life insurance policy which also covered critical illness, so that his family would get a lump sum payment if he got a life-threatening illness.

Susie, Nic's widow told her story to BBC's Watchdog in June 2013. You can read the full story and the full company response via

But when he was diagnosed with cancer in spring 2012, his family were refused the money.

The insurers said the policy was invalid because he had failed to declare all previous health conditions as required under one of the clauses in the contract.

But the specific information they claimed should have been provided was the condition of pins and needles as a result of an unrelated pre-existing medical condition that he had made them aware of.

In October 2012 Nic passed away and his widow Susie faced the threat of losing the family home.

How to complain about a policy

  • Your complaint about a policy or company should always be lodged with the firm providing the service or selling the policy.
  • Try to stay calm and polite, however angry or upset you are.
  • Keep your complaint brief. Say why you're not happy and what you want the business to do about it.
  • Give them a chance to look into your problem. They have eight weeks to do this.
  • If you are unhappy with the response of the company, the Financial Ombudsman Service may be able to assist.

Susie was determined to fight the case and turned to the Financial Ombudsman Service (FOS) which can resolve complaints made against insurers and other companies in the financial sector.

She claimed that all significant health conditions had been declared and the fact that his pre-existing medical condition had side effects of pins and needles was not significant.

In April 2013 the Ombudsman supported Susie. The company paid out and the family received £100,000 plus interest.

Read the full company response to this story which was first broadcast on BBC's Watchdog in June 2013.

Travel insurance

Barry and Jean Mustill from Tonbridge took out a travel insurance policy, for their holiday to New Zealand and Fiji.

The BBC's Rip Off Britain team investigate Barry and Jean Mustill's travel insurance nightmare

The couple went on their six-week holiday of a lifetime in February 2012, but never made it to Fiji.

In New Zealand disaster struck when Jean was hospitalised with a potentially life threatening condition. The doctors believed she had a pulmonary embolism perhaps brought on by deep vein thrombosis.

After a week in hospital Jean was unable to continue their holiday but was declared fit to fly. There was only one destination for the couple - home.

Insurance tips from Sarah Pennells of money website SavvyWoman

  • Shop around. Insurance policies vary widely so get the right cover that suits you.
  • Try your employer first if you're looking for health insurance.
  • Make sure your home insurance policy will pay out to get to the root of the problem and not just to repair the damage.
  • Check what the insurance company will ask you in terms of evidence. For example, when you go on holiday some policies ask you to file a police report if an item of yours has been lost or stolen.
  • Insurers must ask you specific questions if there is something they want to know that could affect your policy.
  • Some pet policies will pay out for a fixed period of time, some will pay vets fees up to a certain limit and others will cover a pet for life, even if it develops an ongoing illness.

The couple submitted their claim to the insurance company for £2,800 which covered the cost of their unused holiday to Fiji.

The couple were stunned when the insurance company initially claimed they would only pay for Jean's half of the holiday to Fiji because she was the only one who had been hospitalised and had to cut short her holiday.

After months of phone calls, emails and letters to the insurance company the couple were left £1,400 out of pocket.

The BBC's Rip Off Britain approached the insurance company and queried the decision.

The company claimed that there had been a 'misinterpretation of the policy wording' and fully investigated Barry and Jean's case.

The company finally settled the claim in May 2013. They apologised and paid Barry and Jean the full amount of £2,800.

Home insurance

Andrew Hill and his girlfriend Chaska Gaines took out home protection and buildings insurance in addition to their mortgage, when they bought a bungalow in Glastonbury.

Andrew stands in the wreckage of his bungalow Andrew Hill stands in the wreckage of his bungalow

After spending 12 months modernising it they were due to move in, but a neighbour's home caught fire which quickly spread to Andrew and Chaska's house.

When the couple submitted their claim on the policy the insurance company rejected it on the grounds that the house was not permanently lived in during the renovation.

Andrew insisted that when he bought the policy he had explained to the person who sold him the insurance exactly what he was planning to do with the house, and how often he would be there.

Andrew's dad Paul was also at the meeting with the broker and Paul confirmed Andrew's version of events.

Andrew turned to the Financial Ombudsman Service (FOS) to put forward his complaint.

In July 2012, the FOS reviewed the case and concluded Andrew's policy was mis-sold.

The company paid out in full in April 2013 and five months later Andrew and Chaska finally moved into their property.

Pet insurance

Peter Lewin from Dorset took out a premium pet insurance policy for his six-year-old pet Labradoodle, Bentley, to cover the cost of any veterinary care he would need.

Peter Lewin and his pet labradoodle, Bentley featured in the BBC's Rip Off Britain series.

When his annual renewal quote came through the post in October 2012 it was around £575, more than double the cost of the previous year's policy.

Peter paid for a pet insurance policy for the first time in November 2009 and it cost him just under £140.

Unfortunately, Bentley required treatment with a problem in his ear, so Peter made a claim for the veterinary payments and follow-up treatment. His policy increased by £50 the following year.

After two more years of no emergency treatments, Peter was shocked to see his renewal policy more than double in price.

He shopped around for a more affordable quote but this was harder than he thought.

Peter was told by the insurers he approached that they would not cover his pet for any condition he had previously been treated for and that he would not be fully covered.

Peter decided to opt for a policy with an alternative company at the cost of £250, half the cost of the renewal quote he received in 2012.

This decision means that Bentley is not fully covered for his pre-existing medical condition.

Choosing the right policy

Get some independent financial advice to make sure you and your family are properly protected.

You can find a local independent financial adviser by visiting Unbiased who provide an impartial service or via the Personal Finance Society which is a free advisor search service from the professional body for financial advisers in the UK.

Additionally, the government's Money Advice Service website sets out information on various financial products and how they work.

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