Cents & Nonsense:Nobody likes to see people excluded or left out. It's not nice. Frustrating people unnecessarily and insulting their honesty and integrity are also bad manners, writes Margaret E. Ward

Yet this, it seems, is exactly how insurance companies make their money, as you'll hear in this tale of three policies.

As a concept, insurance is a great way to ensure that the people and things you work hard for - your loved ones, your home and your health - are looked after if something goes wrong. What you may not realise is that, when you need them, many of these policies are worthless, thanks to a long list of exclusions. Exclusions, or restrictions, are events or situations not covered by your insurance policy.

Restrictions are a necessary evil as insurers cannot cover every possible occurrence or they'd quickly go broke. As consumers, we don't usually examine the exclusions when we're taking out a policy. But let me tell you the true tale of three insurance policies.

Once upon a time there were three little policies - a life policy, a permanent health insurance (PHI) policy and a home insurance policy.

The life insurance policy came to our attention in early December when a neighbour asked for help. This woman (64), of very modest means, lost her husband during the summer to cancer. She made a claim on his small life insurance policy and hoped it would cover the funeral costs. The insurer refused to pay the claim.

She showed me the barely intelligible, jargon-filled letter and asked me to translate it, and to handle all queries with the company, since she did not understand "insurance-speak". I agreed.

The individuals handling the claim, and the reasons for its refusal, change with every letter or phone call. Phone calls are not returned. The people in charge of the claim suddenly leave the company. In one case, it took the company more than six weeks to respond to a letter.

At first, the insurer refused to pay because her husband did not report a cold sore he had in his mouth when he was taking out the policy. Next, they claimed he drank more units of alcohol a week than claimed on the form. Where did they get this information? Did they make it up? Are they doctors? Do they follow customers into the pub and record their pints? Does this mean that we're all excluded from our life policies if we fail to report minor physical changes or if our drinking habits vary?

From what I can tell, the insurance company is accusing a grieving widow of fraud, suggesting her husband was an alcoholic and implying that his cancer was caused by extra units he allegedly drank each week.

It's four months on from my neighbour's initial claim and the complaint continues. Every time I see her she looks worried, thinner and the circles under her eyes are darker.

The second policy - permanent health insurance - provides an income when you cannot work over a long period of time due to serious illness or incapacity. We called on this policy when my self-employed auld fella sneezed and slipped a disk two weeks before Christmas.

Although he has been unable to work for three weeks, he is not covered under his PHI because his back problem is a pre-existing condition. That's fair enough, but the exclusion won't help us pay the mortgage.

The third policy, home insurance, was needed when the boiler started leaking water a week before Christmas and was diagnosed with a cracked heat exchanger. Although the boiler is only two years old, the insurance company insisted, quite aggressively, that it was not covered under our building insurance as it was wear and tear. We might be able to claim for any water damage. Basically, if we had waited for the thing to explode, we'd be covered.

When both our plumber and the consumer advice section of the Irish Insurance Federation said they thought the boiler problem should be covered, the insurance representative became irate and demanded names and phone numbers. It made me wonder if these reps are on commission for every policy they successfully block from a payout.

Consumers are often bullied and frustrated when they complain. The majority of complaints to the Financial Services Ombudsman involve insurance. Many insurance policies are not transparent. It is almost impossible for the average consumer to know what will, and will not, be covered until they make a claim. We should either stop buying insurance or start insisting on realistic, clearly defined, policy exclusions.

Margaret E. Ward is a director of Clear Ink, the Clear English Specialists