Mental health and insurance

If you’ve experienced a mental illness like depression or bipolar disorder, you may have to disclose it to insurers. Find out if you’re affected and the laws that protect you.

Key points

  • People with mental health problems are protected by disability law so insurers can’t unfairly discriminate against them
  • Some types of insurance will legitimately be more expensive for people with past or present mental illness due to there being a higher risk involved
  • If you’re struggling to find cover, you could try specialist brokers or insurers

Mental health issues are more common than you might think - according to 2016 NHS data, one in three adults aged 16-74 were accessing mental health treatment in 2014.

Conditions like depression and anxiety can be debilitating, but as well as affecting your life, they might also make things difficult when it comes to taking out insurance products.

It’s not just the obvious protection, such as health insurance and life insurance that are affected either.

You might find there are ramifications for your car insurance and travel insurance as well.

Do mental health issues make insurance more expensive?

The Equality Act 2010 says that it’s unlawful for insurers to discriminate against you because you have a disability, unless your disability makes you a greater insurance risk.

The risk assessment material must be from a reliable and relevant source.

Mental illnesses won’t always be considered a disability, but the Equality Act defines mental health as a disability where it has a long-term effect on your normal day-to-day activity.

This means that a variety of mental health conditions - including dementia, depression, bipolar Stethoscopedisorder, obsessive compulsive disorder and schizophrenia - might all be classed as disabilities.

The legal protection afforded by the Equality Act means mental illness is likely to have no effect on certain types of property insurance, such as home insurance or pet insurance.

Some types of ‘life events’ insurance might be affected by mental illness and there could also be consequences for car insurance.

In these cases, you might be classified as a higher risk for insurance, making your premiums more expensive.

Some types of insurance might also be more expensive if your mental condition results in you becoming unemployed.

Car insurance

When you’re diagnosed with a mental health problem, your doctor may tell you that you need to report your illness to the DVLA.

If you don’t report your condition to the DVLA yourself, your doctor can do it without your permission.

The DVLA has a list of conditions that you must tell it about and these include schizophrenia, depression and post-traumatic stress disorder (PTSD) among others.

Just because you have to report a condition to the DVLA you won’t be automatically banned from driving.

You have a duty to keep your insurer informed of any DVLA reportable conditions, so you also need to let them know and you shouldn’t wait for renewal to do this.

This could mean the insurer decides to charge more to insure you or it may even no longer be able to offer you car insurance.

Did you know...?

  • It’s illegal for insurers to discriminate against anyone with a mental health problem unless: they have reliable and objective evidence that you’re a higher-risk customer

If you become unemployed due to your mental illness, you should also let your insurer know about this and, again, this may mean more expensive premiums.

Life insurance

When you apply for life insurance, insurers will ask about any pre-existing conditions, including mental illness.

This means that comparison sites will only give you an idea of your price, with the actual cost being confirmed once you’ve given more details about your health.

Insurers will usually also ask for your permission to access your medical records, so it’s futile to try to conceal mental health problems.

Under the Equality Act, insurers can’t charge more or refuse cover without good grounds, but depending on your condition you may find that mental health problems past and present could make getting cover more challenging.

Health insurance

A history of mental illness shouldn’t stop you from being able to get health insurance but, as with other pre-existing conditions, the insurer is likely to exclude treatment for these illnesses from the cover.

Past mental illness will probably be classed as a pre-existing condition if you’ve had any incidences of it in the last five years.

Travel insurance

Some insurers won’t cover pre-existing conditions in a travel insurance policy, and this includes mental illness.

If pre-existing conditions aren’t covered, you won’t be able to claim for any treatment for your mental illness while you’re on holiday, but you’ll still be covered for things like cancellation or theft that aren’t related to your illness.

You may be able to find cover with specialist insurers that includes your pre-existing mental health problems, but it’s likely to be more expensive than standard cover.

The government has published a useful guide to travelling with mental health problems.

Insurer Legal and General cited mental health problems as the second most common cause of income protection claims, accounting for 22% of its claims, while Aegon said mental health accounted for 29% of its claims in 2015

Income protection and mortgage protection

In its 2015 claim report, insurer Legal and General cited mental health problems as the second most common cause of income protection insurance claims, accounting for 22% of its claims, while Aegon said mental health accounted for 29% of its claims in 2015.

Because of this, it’s perhaps unsurprising that claims for pre-existing mental illness will be excluded from most income protection and mortgage protection policies.

However, you should still be able to find cover for other unrelated illnesses and injuries.

As with health insurance, pre-existing conditions are likely to apply with illnesses in the last five years.

Health insurance claims for mental illness

If you already have health insurance cover when mental illness strikes, you might be able to access diagnosis and treatment options above and beyond what’s available on the NHS.

As with other types of health insurance claims, you’ll usually have to see your GP at first, who may then be able to refer you to a consultant or specialist for psychiatric therapies.

In April, 2016, the NHS sets targets for 75% of patients with depression or anxiety disorders to be seen within six weeks and 95% within 18 weeks.

However, private medical insurance (PMI) could mean you see a specialist for treatment much more quickly.

Be aware that your policy may have a limit on the value of treatment allowed, or on the number of days of out-patient or in-patient treatment.

Unfortunately, you may find it difficult or prohibitively expensive to find cover for chronic mental illness, which could include conditions like dementia that have no known cure.

Telling insurers about mental health

In many circumstances there may be no good reason to tell your insurer about mental illness and no reason for then to ask - home insurance, for example.

But for other products, such as motor, health and life insurance, you should never lie to your insurer about medical issues.

If you fail to disclose a mental health diagnosis, your policy could be cancelled or you might be charged a lump sum to make the premium up to what it should have been if you’d been honest.

In a worst case scenario, if your insurer has already settled a claim for you, for instance, it could take legal proceedings against you - and that’s unlikely to be good for your mental health if you’re already unwell.

Specialist insurers for people with mental illness

If you do struggle to find insurance products that cater for your mental health problems, specialist brokers and insurers might be able to help.

Mental health charity Mind maintains a a list of specialist providers for people with pre-existing mental health conditions.