Insurance contracts: compensation scheme coverage
To be protected by the FSCS, insurance policyholders must have a protected insurance contract and be eligible to receive compensation.
Protected insurance policies
To be protected, an insurance policy, generally, must:
Be a ‘relevant’ general insurance contract or a long-term insurance contract. Further details on the types of general insurance contracts and long-term insurance contracts protected by the FSCS can be found in the policyholder protection part of the PRA Rulebook.
- Not be a reinsurance contract.
- Be issued by a relevant firm through an establishment in the UK, another EEA state, the Channel Islands or the Isle of Man. Generally the policy will be protected by the FSCS if the policy is issued by:
- A UK based insurer with a UK establishment (e.g. a UK firm, a UK branch of an EEA or non-EEA firm, a UK insurer providing cross-border services in another EEA state).
- An EEA insurer providing cross-border business into the UK (e.g. via a website).
- A UK branch in another EEA state.
- An insurer with an establishment in the Channel Islands or Isle of Man.
FSCS cover is not available to policyholders with claims against firms that do not have the relevant UK or EEA passport authorisation to bring them within the scope of FSCS cover. This includes any policyholder of a subsidiary of a UK group based in any non-EEA state.
- Relate to a protected risk or commitment:
- For policies issued by a UK-based insurer, the risk or commitment must be located in the UK, another EEA state, the Channel Islands or Isle of Man.
For policies issued through an EEA insurer with an EEA establishment providing cross-border services into the UK (e.g. via a website), FSCS protection covers UK risks or commitments only.
For policies issued by a UK branch in another EEA state, the risk or commitment must be situated in the UK or another EEA state.
- For policies issued through an establishment in the Channel Islands or Isle of Man, the risk or commitment must be situated in the UK, Channel Islands or Isle of Man.
For more information on how ’risk or commitment’ is determined, refer to section 9.5 of the Policyholder Protection Part of the PRA Rulebook.
Not all policyholders are eligible to claim compensation from the FSCS. For claims relating to general insurance, most private individuals and small businesses are eligible for protection. For long-term insurance most claimants, including large businesses, are eligible for protection.
Provided that the claim is a protected contract of insurance, there are no exclusions from eligibility for claims under insurance contracts that cover compulsory insurance
Amounts of compensation: insurers
If, on and from 3 July 2015, an insurance firm has been declared in default and the FSCS is satisfied that a claim is protected and the claimant is eligible (in accordance with policyholder protection rules), the following compensation from the FSCS is available:
Compensation for general insurance contracts
Where the claim is in respect of a liability subject to compulsory insurance, a liability subject to professional indemnity insurance, or death or incapacity of the policyholder due to injury, sickness or infirmity: 100% of the claim.
- All other cases: 90% of the claim.
Compensation for long-term insurance contracts
- 100% of the claim is available for all long-term insurance claims.
For general insurance, the FSCS must calculate the value of the firm’s liability to the claimant in accordance with the contract terms, and pay that amount, subject to any limits, to the claimant.
For long-term insurance, unless the FSCS is trying to secure continuity of cover, it must calculate the value of the firm’s liability to the claimant in accordance with the contract terms as valued in a liquidation of the insurer, or in the absence of this, in accordance with valuation techniques that the FSCS considers appropriate.
This may mean that policyholders will lose some of the value.
List of insurers covered by the compensation scheme
These lists set out the UK-authorised (i.e. regulated by the PRA) and European Economic Area (EEA)-authorised insurers operating in the UK. We update these lists twice a year.
Lists of UK-authorised insurers and EEA-authorised insurers
We update our list of Lloyd’s of London syndicates annually.
List of Lloyd's of London syndicates
Historical versions of the insurers lists are available.