Insurance coverage disputes usually start when an insurer refuses to pay out a claim, or when the policyholder feels that the settlement offered is too low.
If you are dealing with an insurance coverage dispute in Ireland, this guide can help you understand the relevant law and provide practical steps to resolve the issue.
We recommend seeking legal advice from an experienced insurance solicitor at an early stage to ensure that you have the strongest possible claim. Providing your insurer with incorrect information or omitting vital details can prejudice your claim. The specialist insurance coverage disputes team at Good & Murray Smith LLP includes some of Ireland’s leading insurance solicitors.
1. Understand Your Insurance Policy
Before making an insurance claim, you need to have a solid understanding of your insurance policy. A policy is usually made up of
(i) a Policy Schedule and/or Certificate document, outlining the policyholder’s and the insurer’s details and the limits of cover; and
(ii) a Policy Wording document, setting out the policy terms and conditions.
Ensure that you:
- Review the terms: Read through the entire policy, paying attention to the definitions, operative clauses, exclusions and limitations of coverage. Look for any terms that may limit the insurer’s obligations.
- Understand the coverage: Try to understand your coverage and whether the loss claimed is covered under the terms. Businesses usually have coverage for employer’s liability, public liability, product liability, business interruption, property damage, and/or professional liability. Consumers can have travel, motor, home and health policies covering various risks, with home policies offering the broadest level of cover.
- Know the excess: This is the amount you must pay before the insurer covers the rest of the claim. Disputes may arise if this isn’t understood correctly.
- Check the procedure for making a claim: Every policy specifies the steps required to notify an insurer of a claim. Usually, claims must be notified to loss adjusters or via a web form or email address. Ensure these steps are followed.
- Note deadlines: Insurance policies and Irish law may impose time limits for making a claim or starting legal action. Missing these deadlines could severely affect your claim.
- Collect supporting documentation: Gather all evidence related to your claim, such as photographs, police and fire brigade reports, repair estimates, invoices, and any other relevant documents.
2. Insurance Claim Process
When you understand your policy and your entitlements, you should notify the claim to your insurer in the manner specified in the Policy Wording within the specified time limits.
3. Understand the Reasons for Claim Denial
If your claim is denied or there is a delay in payment, try to understand the reasons why. Claim denials and insurance coverage disputes can stem from various issues, including:
- Coverage exclusions: Insurers might deny a claim because it falls outside coverage.
- Late notification: Claims can be denied because the claim was notified late.
- Failure to follow policy terms and conditions: Policy terms often require policyholders to take reasonable precautions or to have certain accreditations or certificates before cover is available. These and other terms can form the basis for claim denials.
- Underpayment of Claims: If the payout is much lower than expected, you may feel the insurer has undervalued your claim.
- Policy misinterpretation: Sometimes, disagreements arise because either the insurer or the policyholder has misinterpreted the policy wording.
- Delay in processing claims: Delays in settlement or claim processing can cause frustration and may require intervention.
4. Challenging a Claim Denial
If your insurance claim has been denied by your insurer, you are allowed to challenge that. Usually, that is done by arbitration, a court claim, or through the Financial Services and Pensions Ombudsman.
Arbitration
Insurance policies often contain an arbitration clause, meaning some or all disputes between the policyholder and the insurer must be resolved by arbitration rather than by court litigation.
Arbitration is like a Court process, but the process is held in private instead of in a public courtroom, and the issues are decided by an arbitrator (usually a qualified lawyer appointed by agreement) instead of a judge. Check the dispute resolution clause in your policy to see if it has an arbitration agreement.
Court litigation
If there is no arbitration agreement in the policy, then any disputes can be resolved through Court litigation. The appropriate court depends on the value of the claim:
- District Court: Claims up to €15,000.
- Circuit Court: Claims between €15,001 and €75,000.
- High Court: Claims over €75,000.
Financial Services and Pensions Ombudsman (FSPO)
The FSPO is an independent statutory body that investigates and resolves complaints about regulated financial services providers in Ireland, including insurance companies.
You must generally have exhausted the insurer’s internal complaints process before approaching the FSPO. Every insurer has a formal complaints process, details of which are usually provided by the Insurer in the Policy Wording or on request.
Eligibility criteria and time limits apply to complaints to the FSPO. Check their website (fspo.ie) for detailed information.
This FSPO process is free. It can be followed for coverage disputes, but it is best suited to low-value disputes, where it is not economical to instruct lawyers. Legal costs are not recoverable through the FSPO, even if you are successful.
The FSPO will investigate the dispute and issue a decision. The FSPO has the power to direct the insurer to pay compensation or resolve the issue. Decisions of the FSPO are appealable to the High Court.
5. Common Disputes
Some legal issues commonly arise in insurance coverage disputes. Understanding these issues can help policyholders better navigate disputes and seek fair outcomes when interpreting their insurance coverage.
Non-disclosure and misrepresentation
- Pre-contractual duty of disclosure: Unlike other contracts, insurance policyholders generally have a duty to disclose all material facts to the insurer before the contract is concluded. A material fact is generally one that would influence a prudent insurer in determining whether to accept the risk and on what terms.
- Misrepresentation: Furthermore, a policyholder has a duty not to make any misrepresentations to the insurer.
Breach of these duties may entitle the insurer to avoid the policy and decline coverage.
Example: A policyholder, when taking out a policy, does not disclose a previous claim in response to a direct question by the insurer. The insurer then becomes aware of the failure and voids the policy, leaving the policyholder without any cover.
Late notification
A policyholder is usually required under the policy terms to notify the Insurer of any claim made against them, or of any circumstances that might give rise to a claim, within a certain time. If the policyholder does not do so, the Insurer might decline coverage.
Example: An employee of the policyholder is injured in the workplace and threatens to sue the policyholder. In breach of policy terms, the policyholder fails to inform their insurer for several months, leading to the insurer declining cover for the claim.
Consumer rights
Consumers (generally defined as natural persons and businesses with a turnover of €3m or less) benefit from additional protections under the Consumer Insurance Contracts Act 2019. In particular, the Act restricts an insurer’s ability to avoid a policy on misrepresentation or non-disclosure grounds in some cases.
Policy interpretation
Exclusion clauses
Most policies contain exclusion clauses, which limit or exclude the insurer’s liability. These clauses are generally interpreted strictly by the courts.
Ambiguity and contra proferentem rule
One of the most significant issues in interpreting insurance policies is ambiguity in the wording of the policy. If a term or clause is genuinely unclear, Irish courts will typically apply the contra proferentem rule, which holds that any ambiguity in a contract should be resolved against the party that created the ambiguity, usually the insurer.
Conclusion
The interpretation of insurance policies in Irish law is a complex area. Coverage disputes between insurers and policyholders are increasingly common. Understanding your policy, following the proper procedures, and seeking advice from experienced insurance lawyers is essential. A solicitor can assess your case, advise you on your legal options, and represent you in court.
If you have a dispute with your insurer, contact us today by emailing gms@goodmurraysmith.ie. We would be happy to have a confidential discussion with you about your rights and your options.
FAQ’s
Can you sue your insurance company?
Yes. An experienced insurance solicitor can advise whether it is worth making a claim. It is important to remember that each case will be decided on its own facts.
Can you sue your broker?
If you have arranged your insurance or made a claim through a broker and they have not performed their duties properly, you might have a claim against them for negligence or breach of contract.
Do time limits apply to insurance coverage disputes?
Yes. Check your policy for applicable time limits.
Do time limits apply to insurance claims?
Yes, check your policy wording, which usually specifies how long you have to notify any claims to your insurer.
What are the costs of insurance coverage disputes?
Costs are a matter to be agreed between you and your legal advisors. Where possible, these are made clear at the outset.
Disclaimer: This guide provides a general overview of insurance coverage disputes. It is not exhaustive and should not be used as a substitute for professional legal advice. You should always seek professional legal advice for your specific circumstances.