South Africa's energy crisis seems to be getting worse by the day, and there is no end in sight. Eskom, the only public energy supplier who has in the past received massive financial injections from the government, seems to be helpless at this point. There are many reasons that have been advanced for this crisis – all of which fall beyond the scope of this piece. Electricity cuts are obviously bound to create serious problems for all consumers – businesses and individuals alike. Persistent and long power cuts can cause serious damage to consumers' properties and belongings. As a result, various kinds of insurance policies are triggered. As most insureds know, not all insurance claims are approved and paid out. In fact, the statistics released not so long ago showed a spike in insurance claims' rejections, particularly in relation to short term insurance claims. Fortunately for most businesses, they have the financial muscle to challenge insurers where the rejection is unlawful and/or unwarranted. Unfortunately, most individuals are not able to challenge these unlawful rejections. The question then arises as to what benefit does it have to take out policies such as home and house contents policies if you have a high chance of having your claim rejected and you are not in a financial position to challenge such rejections. This piece seeks to assist with this question and to explicate how one can enhance one's chances of claiming successfully when such claims arise.
Home and house contents insurance policies fall under short term insurance. They provide cover for the policyholder's property and house contents such as appliances – fridge, stove, television set, kettle, geyser; furniture, paintings, musical instruments, etc. Persistent loadshedding can have many undesirable ramifications such as: break-ins; theft; robberies; fires; damage to electric appliances; etc. Given the importance of the insured items, it is crucial that policyholders take steps to enhance their chances of claiming successfully in the event of any loss or damage to the insured items. These steps include, inter alia:
- Updating policy.
- Ensuring that policy conditions are adhered to at all material times.
- Any material changes to the home/house conditions are communicated to a broker or insurer.
- Any uninsured defects that may impact on the insured items are repaired soonest.
- Ensure that all the required mitigating equipment is installed and is in a working condition. These may include having fire insulators, fire alarms, fire extinguishers, prescribed door locks, etc.
The abovementioned steps do not guarantee that a claim will be approved and paid out. They only enhance one's chances of claiming successfully. Where one has a claim, it is important to report and lodge the claim timeously (soon after the incident); and provide all the required documents, information to enable an insurer to process the claim. Where one's claim has been rejected, it is important that due consideration is given to the rejection, the reason(s) thereof, and possible ways of challenging same. This is important because a policyholder would have paid premiums for such cover with the hope that s/he will be covered in case an insured risk eventuates. Although the insured can do an internal appeal and further make submissions to the Ombudsman's Office without any legal assistance, it is advisable to source legal assistance during such processes for the following reasons:
- Internal appeals and submissions to the Ombudsman's Office are legal in nature and insurance policies are ordinarily highly technical. Thus, the best positioned people to assist with such rejections would be an insurance law specialist.
- The legal costs of such appeals and submissions are considerably lower than the costs which would ordinarily be applicable if the matter goes to court or arbitration.
- In some cases, the insurer's rejection may be justified and lawful BUT the insured may have a claim against an intermediary – e.g., a broker. An intermediary is unlikely to advise the insured that s/he may have a claim against him/her or his/her firm. This is where a lawyer can advise accordingly.
It is important to have such policies in place, particularly after the recent floods and the ongoing loadshedding. Policyholders should however not simply concede the validity of rejections without seeking legal advice.
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.