There are hundreds, if not thousands of cases were an insurer has not paid out on a policy when a claim has been made, because the cause of neglect, accidental or otherwise, by the insured means that they have undervalued the items when making the application. Take one example, that of a house insurance policy. Assume that you have insured your home and on the declaration to the insurer you have stated that the contents of the property are worth £20,000 when in fact they are probably worth nearer £40,000. You may get very slightly cheaper premium, but what happens if disaster strikes and the house is flooded?
The likely outcome will almost certainly be that you will be paid out, yes you will but it could be at half the value of the contents, which is all you have insured for. If the house is burgled and that nice piece of jewellery which you bought was stolen, you might just get half the value.
Insurers will always pay out on genuine claims for travel, motor insurance accidents, but they will always check that you have taken out the correct cover and if you have not read the small print and decided it is not important, you should not be surprised if the insurer raises an item in the terms and conditions! It has come to light through a survey carried out by a holiday home and travel insurance company, that a remarkable fifty percent of homeowners have an insurance claim rejected and further 60% of people never bother to read the terms and conditions when taking out insurance. This is hardly the fault of the insurers and this is why the small print should always be looked at and questioned if you are in any doubt.