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When you feel that your short-term insurer is being unfair about your claim or relying on fine print to avoid paying a claim, who do you call? The short-term insurance ombudsman, that’s who! Neesa Moodley reports
A record 10 253 consumers complained to short-term insurance ombud Dennis Jooste over the past year. He was able to retrieve a collective amount of more than R116 million for them.
There were a few interesting case studies that Jooste dealt with during this period.
PROPERTY MAINTENANCE
The complainant, Mr Y, had submitted three claims against his homeowner’s policy for leaky pipes at his home. When making these claims, he stated that he had noticed the leaky pipes almost immediately after moving into the property, so the insurer honoured the claims.
However, when he submitted the third claim, the insurer assessed the property and found that the pipes were in poor condition and needed to be replaced. As a result, the insurer informed the complainant that any future damage caused by leaky pipes would be excluded on the policy.
According to the homeowner’s policy, “failures due to rust, wear and tear or corrosion will be repaired on the first occasion only”.
The policy went on to state that the particular water pipe that was claimed for would then be excluded from the policy going forward until it was either repaired or replaced by the homeowner. The ombud found that it was the responsibility of the homeowner to maintain the property by repairing or replacing the water pipes, and upheld the insurer’s decision to exclude them from the policy.
THE RULE OF AVERAGE
The complainant, Mr X, submitted a claim to his insurer for two burglaries that occurred on July 23 2013 and July 25 2013.
One of the break-ins occurred in an outside building on the property, which had been converted into an entertainment area. The claim was rejected on the basis that there were no burglar bars and no security door at the entertainment area, and this had not been revealed to the insurer.
On the second claim, the insurer wanted to apply the rule of average, stating that the insured was underinsured. The rule of average applied by short-term insurers is that if you are underinsured by a certain percentage, your claim is paid out less that percentage.
So, for example, if you were insured for R200 000, but the replacement value of your home contents was actually R400 000, you would be accepting 50% of the liability for your home contents.
So, if you filed an insurance claim, the insurer would only pay out 50% of the claim. Mr X complained to the ombud that when he took out the policy, he paid R55 for an asset inventory survey, which was never carried out by the insurer. Instead, the insurer only conducted the asset inventory survey after the claim was filed.
The ombud upheld the insurer declining the first claim on the basis that the security at the property was not in accordance with what had been stated to the insurer upfront.
However, he ordered the insurer to pay the second claim as the asset inventory survey should have been carried out by the insurer at the inception of the policy and not at claims stage.
