Weather conditions of any sort have direct effect on the insurance industry. The severity thereof is, however, of particular significance for the industry, as the possibility of insured risk materialising heightens. At this point in time, this is particularly relevant in South Africa given the ongoing heavy and persistent rains. There have been reports, images and videos on various social media platforms depicting disturbing scenes of the devastation caused by the said rains. Public infrastructure, businesses, private homes, and properties, etc., have been damaged. Even more disturbing are the reports that several lives have been lost as a result. The nature and extent of this destruction necessitates a discussion around insurance – related legalities, as they will certainly be activated. This piece will zoom into the following aspects: insurance policies likely to be activated in cases where there is insurance cover in place; factors that may influence the extent of cover; factors relevant in determining the validity of the claim; whether there may be some recourse for individuals and smaller businesses who may not have the necessary insurance policies in place.
As pointed out above, the ongoing rains will certainly trigger various insurance policies – both short-term and long-term insurance. Most businesses in the affected areas have been disrupted – closed their doors, buildings have been damaged, washed away, etc. This, in turn, activate business interruption policies, structural damage policies, rain and hail damage covers, etc. As income and profits are lost, income protection policies also become pertinent. Private homes have also been affected. Destruction of a private home can have severe effects on the property itself, and persons in that particular home. If the structure's roof, for example, is damaged, there is a risk that various valuables inside the house may be affected and destroyed. In such cases, home and household policies may be activated. In the 2 (two) given examples (businesses and homes), policies for flash floods are also quite relevant. Further, car insurance policies are likely to be triggered. Ordinarily, such claims arise from car accidents, however, during these rains, cars have been flooded, washed away, structures may have fallen on the cars, etc. Therefore, one may see car insurance claims emanating from materialisation of different insured perils. Furthermore, as lives have been lost, life covers may be triggered. These are but some of the most relevant insurance policies that are likely to be triggered during this period. This being said, different cases and claims will present their own unique set of facts and details which will be independently scrutinised, in line with the guiding insurance law principles.
As is always the case, not all lodged insurance claims are honoured by the insurers. Some are, unfortunately, repudiated. Some are justifiably repudiated whilst others are unjustifiably repudiated. Some are partially honoured – in instances where the insurer pays partly and let the insured pay for the rest of the loss. This is prevalent in cases where the insured has failed to adequately mitigate losses. It is at this point where businesses and individuals alike may need legal advice from insurance lawyers. Insurance policies are generally worded in a complex manner and consists of various legal terminology and principles. This is unsurprising given the fact that these policies are drafted by lawyers. As stated above, some claims are honoured by insurers – these would be claims which, according to the insurer, comply with the policy wording, the conditions thereof, and does not fall within the ambit of any of the express and implied exclusions. Rejection of claims may be based on various factors e.g., the claim falling within one or more of the exceptions as per the policy wording, the claim not being timeously submitted in accordance with the provisions of the policy, etc. Insurance policies play a crucial role in assisting with the loss, and in addition, the insured pays premiums for protection. It is for these reasons that repudiated claims should be seriously considered and challenged where the insured is unsatisfied with the reasons for repudiation. Over the years, our courts and other alternative dispute resolution forums have come to the rescue of many insureds whose claims were rejected. Our courts take the view that insurance claims should not be repudiated on trivial and insignificant grounds. Also, they want to give effect to the primary purpose of the insurance contract i.e., to compensate the insured in the event of the insured peril materialising. In cases such as the ongoing rains, the element of sympathy is likely to also play a role in favour of the insureds. Of course, where there are just and legal grounds for the repudiation, the courts will approve of that repudiation.
It goes without saying that not all affected businesses and individuals are insured. Unfortunately, there can be no insurance claim where there is no cover to start with. The best possible relief in such instances is the government's disaster management relief. The nature and extent of the relief depends on the facts and the prevailing circumstances of each incident. The downside of such a relief, as opposed to insurance cover, is that the victim does not have much say in the amount and extent of relief. On the other hand, insured businesses and individuals have insurance schedules, as part of their insurance documentation, which expressly explicates how payments of claims are to be calculated and determined.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.