Business Insurance

Declined insurance: what to do next

Have you been declined for PI insurance or another type of business insurance? Here's what that means, and what to do next.

Insurers have the right to decline to cover any business for a range of reasons. Often you are then required to disclose previous declines and the reasons why you were declined when seeking new policies. What should you do when receiving a decline for a professional indemnity quote, and how can you make the best out of a bad situation?

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What if an insurer refuses to provide me a quote?

If an insurer won’t provide you with a quote from the start, it is likely that they don’t have the knowledge or desire to insure your business activities properly. Don’t panic, this isn’t a hard decline and you usually don’t have to declare this to other insurers when seeking quotes, it just means your activities are not the target market for that insurer. See if you can get a clear reason from the insurer to provide to others when shopping around. If this happens a lot, seek assistance from an insurance broker.

What if I get declined after receiving an indication?

If you have already received a price but you are declined terms after that, unfortunately there’s not much you can do as a quote isn’t binding until you have paid. It’s likely that the insurer or broker has learned something new about your business which makes it harder to cover you. Obtain as many details as possible, and ask if the decline constitutes a ‘hard’ decline, i.e. one which you should declare when seeking a new policy, or simply a ‘no quote’; something which doesn’t have to be mentioned as a decline to other insurers.

Can my insurer cancel my policy midterm?

Yes, your insurer can cancel your policy with immediate effect, or even cancel it from the beginning (known as ‘ab initio’), at their discretion. You will likely be told exactly why this is happening, and in some cases you can be refunded in full for the time spent on cover. Declines/cancellations like this are usually reserved for policies which are totally unsuitable or cases where the insurer learns something about your business which would have stopped them from quoting in the first place. You should declare this as a decline to any future insurers or brokers you approach and give them the reason for it.

What should I do if my policy is cancelled at renewal?

If your policy is cancelled at renewal, ask the insurer if this constitutes a decline which must be declared to other insurers or not. Insurers will change their target markets sometimes, and in some cases this is due to restructuring or profitability issues. You should also ask where they suggest you obtain a new quote, but usually a policy declining at renewal is a strategic decision of the insurer, unless you are changing business activities or clients in a way which takes you out of their scope.

Can my insurance be cancelled during an ongoing claim?

No, an insurer has a responsibility to continue to hold your cover whilst any claims are being resolved, and if this does happen you may complain to the financial ombudsman service (FOS). Other insurers will not want to quote you until the claim is resolved and closed, so without being able to provide those details you are unlikely to get a policy anywhere else.

What are my options after a decline?

If you have been declined once or more it’s likely that finding insurance will become more difficult, so make sure you have clear and logical statements from your previous insurer(s) explaining why you were declined. Insurers vary greatly on what they consider to be acceptable risks, and you may find that another insurer has no problem whatsoever with whatever caused the decline to occur. If you are refused, always ask for a recommendation for where to go next, and consider the services of a broker if you are not already using one.

What should I tell new insurers about my decline?

When approaching new insurers, be sure to have a clear explanation of any previous declines to provide them. If you have had any claims they will likely want a few additional pieces of information, so have these ready:

  • Date of events which caused claims
  • Date claims were notified to insurers officially
  • Amount initially claimed for
  • Amount paid by insurers
  • Status of claim (active/closed/declined to cover)
  • Any other cases (outstanding or historical) where the same claim could be made by other clients
  • What you have done since the claim to prevent it or something similar from happening again

My premiums have increased since I was declined, why is this?

If the decline was following a claim, the claim is likely driving your costs up, but any historic declines can also turn new insurers off covering you. Part of any insurance company’s process is risk assessment, and unfortunately the more declines and/or claims you have had historically (with claims being worse than declines), the more you’ll see higher quotes from insurers. Be prepared to challenge costs and show ways in which you have reduced or eliminated risks faced by your business and this may help to bring quoted premiums down.

Alex Roebuck

Alex is a freelance writer with a background in professional indemnity underwriting and has worked as both an insurance company employee and at a brokerage. His insurance experience encompasses a range of SME and personal products, although he also has interests in technology, literature, finance and all things esoteric and complex.