The ombudsman for short-term insurance
“You sometimes find that the debit order by the insurer randomly does not go through and in that instance people don’t usually enquire why the debit did not go through. That can lead to a cancellation of the policy and sometimes it is not communicated to [the customer] timeously,” Maphumulo said.
Second, the customer will need to adhere to all conditions of the policy and also ensure that any material changes to the insured item are communicated to the broker or the insurer.
Maphumulo said this is because the changes impact on the risk and any impact or effect to the risk affects the premium that has to be paid. “If these changes are not communicated timeously, it may be a ground for the insurer to repudiate your claim.”
Most policies will have conditions that stipulate that the customer will need to install or implement certain mitigating equipment.
“In relation to the ongoing load-shedding, they say that for you to be covered for surges you need to have something like a fire insulator, fire alarms and fire extinguishers. Or with the load-shedding, we know there is a possibility of a spike in criminal activities, they may prescribe particular locks for your house and garage. You need to look out for those kinds of conditions and make sure they are installed and are in good working condition at all times,” Maphumulo explained.
Maphumulo said that following these steps would not be a guarantee that a claim was approved and paid out. They would, however, enhance one’s chances of a successful claim.
Why do claims fail in the first place?
According to Maphumulo, claims sometimes fail when there is a provision in the policy that was not adhered to, such as non-disclosure of material conditions.
“When you take out an insurance policy you would have seen that they ask questions relating to the possible problems you may encounter in relation to the item you are taking out insurance for. If you fail to disclose certain information that they deem to be material they may come back to you when you claim and say these defects or issues are pre-existing and you did not disclose them at the time of taking out the policy, therefore they repudiate on that basis,” he said.
Other times a failure to disclose some of the things that occurred after a policy was taken out could lead to a rejection of the claim.
However, some rejections can be unlawful or unwarranted. One such example, Maphumulo said, is where there is a condition in the policy that is unclear or ambiguous, meaning there could be various interpretations.
“What the courts have now said is that those conditions are legally incorrect so they are unlawful because the conditions cannot be relied on by the insurer themselves. So the responsibility to ensure that there is no ambiguity in those conditions lies on them,” he said.
How to take the claim rejection forward
There is a cost and time element that needs to be considered when taking the claim rejection forward.
“Ordinarily with short-term insurance policies you as the insured would go through the internal appeal route first. Most of the time the insurer will stand by its initial decisions and from there you would need to make submissions to the ombuds office,” Maphumulo said.
At the ombudsman for short-term insurance, the claimant will challenge the rejection and submit reasons why they believe the decision should be overturned. If the decision from the ombudsman remains the same, the claimant is free to approach the courts.
“Before you go to court you need to think of the value of the insured item. You are going to spend so much money trying that route and it’s pointless if the value of the item does not justify that route. Sometimes you may sit in a situation where you’ve got to accept the rejection as much as you believe it should not stand because the cost element that comes with the litigation is too high,” Maphumulo said.
Bottom line? Make sure that your policy covers the necessary and is up to date.