Avoid Claim Rejection

South Africans risk having their short-term insurance claims rejected if they neglect maintenance or safety responsibilities, as local insurers increasingly refuse to cover damage caused by poor upkeep or negligence.

John Wessels, actuary and member of the Short-term Insurance Committee of the Actuarial Society of South Africa (ASSA), explained that all short-term insurance policies have “general duty of care” clauses.

These clauses oblige policyholders to manage preventable risks by safeguarding and maintaining insured property. The aim, Wessels said, is to maintain fair and affordable insurance coverage.

This means South Africans who have not recently waterproofed their roof, checked their electric fence, or ignored the advice of their auto repair centre to replace their car brakes could be voiding their short-term insurance cover.

“Your building, household and vehicle insurance will therefore exclude cover for damage or loss caused as a result of poor maintenance or negligence. Known as exclusions, these clauses are often overlooked and misunderstood by policyholders,” Wessels said.

He explained that exclusion clauses commonly require policyholders to maintain the insured property in a manner that prevents damage and avoid actions that increase the risk of loss.

However, because exclusion clauses are often misunderstood, when an insurer rejects a claim citing this clause, consumers frequently feel that they are being unfairly treated.

According to Wessels, short-term insurers exist to pay honest claims resulting from sudden and unforeseen risks.

If insurers did not apply exclusion clauses and settled claims for damage or loss caused by negligence or a lack of care, short-term insurance premiums would soon be unaffordable.

As a result, policyholders who take care of their property would be subsidising those who do not. This is particularly worrying since many South Africans view insurance as a luxury which can be cut in difficult financial times.

Insurers typically apply inflationary increases between 6% and 15%. However, if these were to increase even more, it would push even more customers to rethink or cancel their policies, leaving them in a risky financial position.

Claims rejected

According to the 2024 Annual Report of the National Financial Ombud (NFO) Scheme, the biggest reason homeowners’ insurance claims were rejected in 2024 was due to exclusions related to wear and tear, gradual deterioration, and a lack of maintenance.

The report details the case of a homeowner who submitted a claim for water damage caused by a storm. The insurer rejected the claim after a roof inspection showed that it was in poor condition and had not been maintained.

The homeowner complained to the NFO but could not prove proper roof maintenance, so the non-life insurance division adjudicator dismissed the complaint.

Wessels said it is unsurprising that in 2024, rejected claims for loss or damage due to acts of nature contributed 40% of complaints submitted to the NFO.

He added that short-term insurers usually receive many claims following acts of nature.

However, insurers often find that weather-related damage could have been prevented if the damaged property had been properly maintained or if proper risk avoidance measures had been followed.

Common examples include water damage caused by poorly maintained roofs, collapsed boundary walls that had been in desperate need of repair for years, and cracked swimming pools due to neglect.

This also applies to cars. For example, if someone were to try crossing a river in flood with their new off-road vehicle despite warnings from disaster management not to attempt this, insurers are unlikely to cover the cost of the new car.

Wessels also cautioned homeowners to ensure that home security is maintained and functional. If a burglary happens, there are cases where insurers will likely reject the claim.

This includes instances where access was gained to the home because the electric fence was not working, the security cameras were no longer monitored, or the homeowners had not replaced a broken security gate lock.

He stressed that the same “general duty of care” applies to vehicle owners. For example, a car owner may go against an auto repair centre’s advice to replace their brakes because they are on a budget.

If they are involved in an accident a month later, the claims assessor may find that worn brakes prevented them from stopping in time, which could have helped avoid the accident.

In that case, the claim will be declined. Suddenly, the vehicle owner will be faced with a much bigger financial disaster.

Wessels said that some short-term insurers are focused on creating greater awareness among policyholders of their “general duty of care” responsibility by highlighting exclusions in the policy document and explaining them.

He urged policyholders to open and read these documents, which are usually emailed with the policy renewal notice.

If a policyholder has not heard from their short-term insurer for a while, Wessels advised that they make an appointment with their broker or insurance company and ask them to explain the exclusions and their implications.