Why insurance companies don’t pay out
Insurance companies are financial institutions that invest a certain portion of their finances into an individual through insurance. And just as any financial organisation when an entity makes an investment decision, it exposes itself to a number of financial risks.
And this is why usually insurance companies don’t pay out as they employ a different type of risk management, which focuses on the effects of financial risks on their organisation. Hence it’s why when it comes to claims. Insurance companies are risk-averse. When you get into an accident, regardless of fault, you may be viewed as a higher risk. To offset this, the insurance company might elect to impose a surcharge.
Then of course some policies may seem cheaper, but you may find you don’t have the same level of cover when you have to make a claim. Hence your insurance provider won’t pay out therefore read the fine print and understand exactly what it is you’re covered for. Don’t just assume that your household contents policy also includes vehicle insurance, and then be surprised it doesn’t when you have to make a claim.
Another reason for an insurance company not to payout is if a policyholder didn’t provide their insurer with all the necessary personal and risk information. For example, if your teenager actually uses your car regularly and the policy has you down as the main driver, insurers are well within their rights to reject any claims should an incident occur. Full disclosure of information enables insurers to correctly assess potential risks and tailor the most suitable insurance cover for you.