Ten most common reasons for rejecting motor claims

It is devastating when your car is damaged but even more disappointing to find that your insurer won’t pay up because you were not covered for a particular eventuality.

Insurance protects people against unexpected events and whatever their policies define as a risk. Circumstances do, however, arise where “an insurer may refuse to settle a claim because of an exclusion or breach of policy condition” says Gari Dombo, Managing Director, Alexander Forbes Insurance.

While insurance even protects you from loss caused by your own negligence it will not cover gross negligence, namely, where the insurer can show that you intentionally disregarded a situation knowing that the loss was likely or probable.

As such, Dombo advises clients to be wary of the following most common causes of rejection:

· Driving under the influence of alcohol or drugs - motor insurers will not pay out if you were driving over the legal blood alcohol limit or have been tested positive for misusing drugs. Other policies simply state that while under the influence while others specify a limit. Some insurers will go further and reject a claim if the person you lend your car to is under the influence even if you didn’t know.

· Suspended or cancelled license – your insurer won’t pay up if they find out that you do not have a valid driver’s license at the time of the accident. Insurers see you as contravening the law and insurance does not cover any illegal activity. Some insurers will go further and reject a claim if a person you lend your car to is unlicensed even if you didn’t know.

· Allowing a friend to drive a vehicle – if you allow a friend or anybody to drive your car without informing your insurer, you may end up footing the bill for an accident. This is because some insurers restrict driving to nominated drivers.

· Failing to report an incident to the police within 24 hours – most insurance policies clearly state that you have to inform the police within 24 hours if you are involved in an accident or if your car has been stolen.

· Not taking your car for an inspection – with certain insurers, if you are insuring a newly acquired or used car or have decided to change insurance companies you may need to take your car for an inspection. They want to see that your vehicle exists and that it is not damaged. If you do not do this, your claim may be rejected.

· Not Installing security devices – some insurers will not pay you out if you have not installed the standard security devices in your vehicle that they require, like an alarm and immobiliser or a tracking and recovery system.

· Car modifications – you need to inform your insurer whenever you modify your car to change its performance. They would need to know for example, when you have modified the engine or added turbos as this may affect the rate that is charged. If you have installed a new sound system, mags or other accessories, these may not be covered unless you advise first.

· Driving across our borders – There is no cover when you drive beyond the territorial limits stipulated in your policy. Most insurers cover you within the borders of South Africa and in immediate surrounding countries. If you plan to drive out of the territorial limits of your policy you need to have cover extended for where you are going.

· Using a vehicle for business purposes - check the “use description” that applies to your vehicle carefully. Insurers differ in their use descriptions and you may not have the cover that you think. For example Private Use may include driving to and from work and attending the occasional meeting, but some wordings do not. The idea here is to be able to get a sense of how far the vehicle will be driven e.g. sales reps drive their vehicles all the time and the chances of getting involved in an accident are also high, whereas a pensioner is never in peak hour traffic.

· Relocating and changing parking areas –If you decide to move to a new flat or buy a new house, it is very important that your insurer knows about your new location and parking arrangement. The changed circumstances can affect your risk profile and rate.

Since the above list is by no means exhaustive it is very important to read and understand the small print on your insurance policy.

“Once you have read and understood the policy and you are still unhappy about your insurer’s decision not to settle your claim you can always approach the Insurance Ombudsman” advises Dombo. The Ombudsman acts as a mediator between unsatisfied clients and their insurance companies.

“The Ombudsman considers all claims as long as they are below R800 000 and are filed by a policy holder or their legal representative” concludes Dombo.