Household insurance – Break-in by physical damage required

A policy that indemnifies household contents insured for a break-in or theft that requires the observer to “see physical damage” will compensate the insured only if physical damage can be seen by the insurer after the event.

The insured in Pillay v The Hollard Insurance Company Limited alleged that various items of clothing and other household goods, as well as jewellery, to the total value of about R130 700 was stolen from a cupboard in his home. He blamed his domestic employee who confessed and was arrested following a report to the police.

The lawyer for the insured, somewhat fancifully, submitted that physical damage occasioned by theft requires no more than that the items be shown to be missing from the shelf on which they were last left. It was alleged that this amounted to the insured being able to see physical damage caused by the break-in because the goods were, physically, no longer there and what was recovered was soiled. Not surprisingly this argument was dismissed and it was found that there is no ambiguity in the words of the policy.

There was also an attempt to claim under the All Risk section of the policy for the loss of jewellery. Jewellery was only covered if there is “visible forcible violent entry into or exit from the receptacle” in which the jewellery was kept. It was conceded that the jewellery was not kept in a securely locked receptacle but the insured’s case was that the jewellery was not jewellery proper but costume jewellery. That equally fanciful argument was as easily dismissed as the other argument and that portion of the claim failed as well.

It took the supreme court of appeal no more than four pages to reject the insured’s arguments.

First publised by: Financial Institutions Legal Snapshot