Short-term insurance can be a welcome safety net, but it works in your favour only if you follow the rules, says Bertus Visser, the chief executive of distribution at PSG Insure. Some claim horror stories to emerge from recent rulings by the Ombudsman for Short-term Insurance (Osti) highlight some important lessons. Keeping these in mind can keep future claims on track, says Visser.
A huge issue within short-term insurance claims is wear and tear. Being a homeowner comes with a list of maintenance requirements for your property to keep your cover in place, says Visser. Trying to claim for damages when they resulted from using an item, or failing to maintain it properly, won’t get you far. It also won’t help to ignore a problem and assume insurance will fix it in the end, says Visser.
In one case, there had been previous assistance on a claim to reroute and repair leaking pipes, but a dispute arose later when further claims came in for more water damage, says Visser.
On investigation of the photographs and reports, it was concluded that the water damage had occurred over time and, being a perils-based policy, it was evident that no insured peril caused the further leaks, so the claims were rejected, he says.
It’s essential to carry out proper maintenance to remain insured. If the leak had been dealt with early enough, wear and tear or gradual deterioration would not have been a factor. It’s essential to deal with issues as soon as you spot them, says Visser.
In another case, a lapa structure collapsed and the owner asked for it to be replaced or repaired by his insurer, without providing a cause for the collapse beyond gradual operational issues, says Visser.
The insurer declined the claim, as the cause was found not to be the result of an insured event either. The policy clearly stated the exclusions and there was no cover for “damage predominantly caused due to gradually operating causes and wear and tear”, says Visser. The insured had, however, submitted a claim for precisely those exclusions and therefore the claim was rejected.
These types of scenarios are not uncommon, says Visser. When you begin a contract with an insurer, it’s essential to disclose truthful information in full, says Visser. Every renewal should follow the same protocol. If you fail to disclose that you had another insurance policy cancelled, it can catch up with you.
An example saw a client involved in a car accident that she claimed for from Insurer B.
It came to light that a previous policy with Insurer A had been terminated due to the client providing dishonest information. Insurer B not only rejected the claim based on fraud, but also cancelled the current policy and refunded the premiums, says Visser.
The client tried to argue that she had not been asked about the prior cancellation. However, the Osti ruled that under “general details’’ when putting Insurer B’s policy in place, the client could have – and should have – mentioned the prior cancellation by Insurer A, says Visser.
The form even included a signed warranty stating that all information was true and provided in full, as far as the client knew. In this case, she deliberately left out mentioning the prior cancellation, which eventually meant being left out by her current insurance, he says.