If you paid for cover with an insurer that has become insolvent, we may be able to compensate you. This is subject to conditions, limits and requirements set out by the Prudential Regulation Authority (PRA) in their rulebook.
To be eligible for protection, the company that failed must have been regulated by the Prudential Regulation Authority (PRA).
How we protect customers
There are three ways that we can protect eligible customers of failed insurers:
1. If the policy is replaced by a new policy with a different insurer, we can pay the new insurer towards the cost of this.
2. If the policy is not replaced and eligible customers are entitled to the remaining portion of their insurance policy premium, we fund and process this payment. Please note:
- The rules we follow say that we can only repay 90% the refund that is calculated
- If the insurance policy is in your name, but you paid for it with a loan from a finance company that required you to assign your rights to them, we will pay any return of premium payments to the finance company directly.
3. If policyholders have valid claims under an insurance policy with a failed insurer, which meet our conditions for eligibility, we pay either 90% or 100% of the claim value to eligible policyholders. Please see below for detail on compensation for different insurance types. This information is accurate as of December 2020.
The following insurance claims are entitled to 100% compensation. That means that if the insolvency practitioner accepts them, we will repay them in full:
- Third-party motor
- Employers’ liability
- Whole of life assurance
- Term life insurance and/or critical illness insurance*
- Insured personal pensions*
- Income protection insurance – also known as permanent health insurance or long-term disability insurance*
- Professional indemnity insurance*
- Claims arising from the death or incapacity of a policyholder due to injury, sickness or infirmity (e.g. a death or disablement benefit of a personal accident policy or similar benefit on a motor policy.) *
- Building guarantee policies for firms that failed on or after 8 October 2020. Prior to this, 90% of the value of eligible claims will be repaid.
* If the firm failed on or after 3 July 2015. If before, claims are 90% protected.
The following insurance claims are entitled to 90% compensation. That means that if the insurer’s IP accepts them, we will repay 90% of their value:
- Motor first party
- Public liability
The following insurance claims are not eligible for FSCS protection:
- Goods in transit
- Credit insurance
- Contracts of reinsurance for insurance firms or brokers / financial advisers