Insurance companies 'too slow to pay out'

If you've ever been unfortunate enough to make a claim on an insurance policy, you'll no doubt know how long the process can take.

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The Law Commission is today calling for insurance companies to make faster payouts to firms and say that insurers should be legally obliged to compensate valid claimants for losses from delays.

Branding the current insurance contract law "unfair," the Law Commission points out that businesses can be made to wait up to six months to get an insurance payout – with no compensation offered for the wait. Such a delay could put some small firms, such as those affected by the summer riots, out of business.

Current legislation in England and Wales doesn't allow policyholders to claim for losses due to delayed payouts - which is something they want changed.

Law Commissioner David Hertzell said: "In this respect, insurance contract law is unfair, unprincipled and out of step with today's commercial realities.

"Small businesses, such as those struggling to get back on their feet after the recent riots or after floods, are particularly vulnerable to late payment of insurance claims," he said.

"We are seeking a solution that balances the insurers' need to investigate claims against policyholders' expectations that valid claims will be paid on time."

Have you been affected by insurance firms who are slow to pay out? Leave a comment below...