Claims procedures and time limitations

The office of the Ombudsman for Short Term insurance (OSTI) often receives complaints about claims that have been rejected as a result of non-compliance by insureds with policy requirements.

Adhering to the claim procedure and complying with the time limitations in a policy are important in achieving a successful claim outcome.

Every policy sets out the insured’s obligations in the event of a claim, such as the time period within which a claim must be reported to the police and the insurer, which towing operator may be appointed, what information must be provided to the insurer, what should and should not be done at an accident scene, the period of time within which to dispute the outcome of a claim, etc. Failing to adhere to these obligations may prejudice the insurer’s assessment of a claim and may provide the insurer with grounds to reject a claim.

When deciding whether such a rejection is valid, this office takes into account considerations of fairness and equity.

In circumstances where such a breach by an insured is not material or will not prejudice the insurer, and to decline the claim on such a breach will lead to an unfair outcome, this office will take into account what is fair and reasonable in the particular circumstances.

Mrs S had a legal expenses insurance policy which covered the conveyancing costs of the purchase of a property up to a maximum of R6000.

The insurer rejected the claim on the grounds that the claim was submitted late. Documents provided by Mrs S showed that she had purchased a property and it was registered in her name in 2016. However, Mrs G only submitted a claim to the insurer for the conveyancing costs during 2018.

Mrs S said in her complaint that she was not aware that her policy covered conveyancing costs.

The insurer stated that the policy required an insured to inform the insurer of any insured event or cause of action that may give rise to a claim within 30 days of the event. The insurer argued that the significant delay by the insured in reporting the claim prejudiced its assessment of the claim as it would be unable to verify the event.

This office found that, but for the late notification, the insured had a valid claim in terms of the policy. Since the insurer could not demonstrate what actual prejudice it had suffered by the late notification, this office requested the insurer to reconsider its stance and settle the claim based on the conveyancing tariffs applicable in 2016. The insurer agreed and settled the claim.

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