Insurance Won't Pay Out? How to Challenge a Rejected Claim (UK)

You paid the premiums for years, the worst happened, and you did the one thing insurance is for — you made a claim. Then the letter came back: declined. It is a horrible moment, and the natural reaction is to assume the insurer has the final say. It does not. An insurer's decision to refuse a claim is the start of a process you have real rights in, not the end of it — and a significant share of refusals do not survive a proper challenge. Here is how to push back the right way, the rule the insurer has to follow, and the free route that can order them to pay.

This guide covers personal insurance taken out by an individual — home, motor, travel, pet, life and similar policies — regulated by the Financial Conduct Authority. Business and commercial insurance is governed by somewhat different rules and is not the focus here.

The Rule the Insurer Has to Follow

Insurers are not free to reject claims however they like. Under the FCA's Insurance Conduct of Business rules — ICOBS 8.1 — a firm must handle claims promptly and fairly and must not unreasonably reject a claim. On top of that, the FCA's Consumer Duty (in force since 31 July 2023) requires firms to deliver good outcomes and not to make it harder to claim than it was to buy the policy in the first place. These are conduct rules the regulator enforces; they do not, by themselves, hand you a cheque — but they are exactly the standards the Ombudsman measures an insurer against, which is why quoting them in a complaint carries weight.

The Most Common Reason Claims Are Wrongly Refused: "Non-Disclosure"

By far the most contested ground for refusal is that you supposedly failed to tell the insurer something, or got an answer wrong, when you took the policy out — often called non-disclosure or misrepresentation. Insurers sometimes lean on this to avoid a claim over a minor or innocent slip. The law here changed in the consumer's favour and many people do not realise it.

Under the Consumer Insurance (Disclosure and Representations) Act 2012 (CIDRA), you are no longer expected to guess what might matter and volunteer it. Your only duty is to take reasonable care not to make a misrepresentation when answering the questions the insurer actually asks. That has a big consequence: if the insurer never asked, or asked a vague or ambiguous question, a supposed "failure to disclose" is much weaker ground than insurers often imply. And the standard is that of a reasonable consumer — assessed against how clear the questions were.

CIDRA then sorts any genuine mistake into categories, and the remedy has to match:

• An honest and reasonable answer. If you took reasonable care, there is no qualifying misrepresentation at all — and the insurer must pay the claim on the normal terms.
• Careless. An honest mistake that fell short of reasonable care. The insurer cannot simply walk away — it gets a proportionate remedy: whatever it would have done had it known the true position. That might mean applying the terms it would have set, or reducing the payout in proportion to the premium you would have been charged — but often not a complete refusal.
• Deliberate or reckless. Only where you knew the answer was untrue (or did not care) and knew it was relevant (or did not care) can the insurer refuse the claim outright and avoid the policy. Crucially, the burden of proving this sits on the insurer, not on you.

When a Refusal Might Actually Be Valid

It is only fair to be straight about this: not every rejection is wrong, and insurance does not cover everything. A claim can be lawfully refused where, for example:

• the loss falls within a genuine, clearly worded exclusion in your policy (many travel policies exclude certain pre-existing conditions; many home policies exclude gradual damage);
• you broke a condition of the policy that is genuinely connected to the loss — for instance a required alarm you agreed to set and did not (though a breach with no real bearing on what happened is much harder for an insurer to rely on);
• the damage is wear and tear or gradual deterioration rather than a sudden insured event;
• a home was left unoccupied beyond the period the policy allows without telling the insurer; or
• there is simply not enough evidence to show the loss happened as claimed — the burden of proving the loss is on you.

The point of a challenge is not to pretend every "no" is unfair. It is to test whether the insurer has applied the policy and the law correctly — because when it comes to non-disclosure, disputed exclusions, or a low-ball offer, very often it has not.

Step One: Complain to the Insurer First

You cannot go straight to the Ombudsman — you have to give the insurer the chance to put it right first. Make a formal written complaint to the insurer, setting out clearly why you think the decision is wrong and what you want (the claim paid, or a fair settlement). From the day it receives your complaint, the insurer has up to eight weeks to send a final response. If it either sends a final response you are not happy with, or the eight weeks pass with no proper answer, you can escalate — you do not have to keep waiting indefinitely.

Step Two: The Free Financial Ombudsman Service

The Financial Ombudsman Service (FOS) is a free, independent scheme that settles disputes between consumers and financial firms, including insurers. It looks at what is fair and reasonable in the circumstances, not just the strict wording, and it can direct the insurer to pay the claim, add interest, and pay compensation for distress or inconvenience. If you accept an Ombudsman decision it is binding on the insurer; if you reject it you are still free to go to court instead.

Two deadlines matter, and missing them can cost you the case:

• You normally have six months from the date of the insurer's final response to refer the complaint to FOS.
• Separately, FOS generally will not look at a complaint brought more than six years after the event, or (if later) three years from when you knew, or ought reasonably to have known, you had cause to complain.

There is a limit on how much FOS can order a firm to pay. For complaints referred on or after 1 April 2026 that limit is £455,000 (for acts or omissions on or after 1 April 2019). This figure is increased each April in line with inflation, so check the current amount on the Financial Ombudsman website — but it is far above the value of an ordinary household or motor claim.

A realistic note: the Ombudsman decides each case on its own facts and does not automatically side with the consumer. Insurers win a meaningful share of referred complaints. But it is free, it is independent, and it removes the insurer's ability to have the last word.

How Long Do You Have? Mind the Two Clocks

It is easy to confuse two separate time limits, so keep them apart. The FOS deadlines above (six months from the final response; six years / three years overall) govern taking the dispute to the Ombudsman. Going to court instead is a different clock: a breach-of-contract claim is generally subject to the Limitation Act 1980 — commonly six years in England & Wales from the refusal — while in Scotland the equivalent period is usually five years. Because the two routes run on different timetables, the safe course is to complain in writing promptly and not let any of them slip.

Putting It in Writing

A rejected insurance claim is won or lost on a clear, firm written complaint — one that names the right rules, pins down the real reason for the refusal, and forces the insurer to justify it. A strong letter will identify the policy and claim, set out exactly why the decision is wrong (for a non-disclosure refusal, that means challenging which CIDRA category the insurer is really entitled to use), point to the insurer's duty under ICOBS 8.1 not to reject a claim unreasonably, state what you want, and make clear that you are prepared to take the matter to the Financial Ombudsman Service. A specific, well-argued letter that shows you know the framework achieves far more than an angry one — and it puts your challenge properly on record.