According to the PWC 2015 Insurance Industry Analysis, more South Africans than ever before now have some sort of short-term insurance policy in place. The number of insurance claims people are making has increased. However, we have also seen an increase in the number of claim repudiations.
The reasons for the increase in claims submitted but not settled by insurers can be difficult to determine, or to put down to a single factor. In our experience it can be due to some of the following issues:
1) The insurance policy lacks specificity
These are typically claims where appropriate cover for a specific item was not taken out, or when insurable items are not specified correctly. Underinsurance can be an issue as well, affecting both building and contents insurance. Claims will only be considered to the percentage you have insured for.
If you buy or inherit something after your policy has been drawn up and signed, you can encounter problems if you need to claim unless you update your policy. Include any new items you need insured, as soon as you own them.
2) Gradual deterioration of belongings
Items that deteriorate naturally or from use over time, to a point where they are eventually no longer usable, are almost never covered. Insurers generally cover a loss if the damage was sudden and unforeseen.
3) Failing to consider property maintenance and additions
Building insurance can also be tricky if proper maintenance is not carried out on your property. Home improvements, such as adding green features like solar panels or a generator, might not be covered if the policy is not amended to include them specifically.
4) Lack of proof of ownership
It is also important to note that if you can’t prove that you owned an item, it may not be replaced. An example of this could be if you have no proof of serial numbers on electronic equipment.
5) Non-compliance with security
Burglary claims are often rejected if you don’t comply with the security requirements set out in your policy. For example, an alarm clause in a policy may include:
- that an alarm system must be installed
- that the system must be linked to a 24-hour reaction unit
- that it must be maintained and in good working order
- that the alarm must be activated when the dwelling is unoccupied, even for short periods of time (i.e. to go to the shop or to drop the kids at school)
- that the system may not be removed without the insurer’s consent
To ensure that your claims are successful, it’s important to make sure your insurance policy is up to date and specifies exactly what you need cover for. Equally important is making sure that you adhere to the terms and conditions of your policy.