Some tips

08 October 2004 Angelo Coppola

The premise, "the more you know the less likely you are to be surprised" is particularly relevant to insurance policyholders, says Gari Dombo a senior executive at Alexander Forbes Personal Services.

According to Dombo, many policyholders are not fully aware of their rights and responsibilities or the potential pitfalls and complications of their insurance policy - until they need to claim. 

The advice is based on a generic insurance policy and may vary according to specific insurance policies, however the principles are applicable to most policies.

  1. Always read the fine print The terms and conditions of the policy stipulate exactly what the insured is and is not covered for and failing to read the fine print of a policy could result in the insured not knowing what they are actually covered for.

    Many policyholders only peruse their policy document and realise the extent of their coverage in the event of a claim, says Dombo and usually it is then too late to take corrective action.

    Even comprehensive insurance cover has limitations so reading the fine print and being aware of exclusions is important to avoid a claim being repudiated.

    Some cover exclusions may include: 
    (a) use of the vehicle on non-tarred roads
    (b) use of a vehicle for purposes other than the purpose stated on the policy, i.e. when the insured has selected "social or private usage" on the policy and the vehicle is used for business purposes
    (c) use of the vehicle by a person other than the driver stated on the policy
    (d) avoidable negligence, such as intently driving through a deep body of rainwater in a vehicle that is not designed for such usage. 

    A standard clause stipulated in every motor insurance policy states, which many policyholders are not aware of, is that policyholders are expected to take all reasonable steps and precautions to prevent / minimise loss of or damage to a vehicle. 

    "Neglecting this clause often can lead to repudiation of a claim," cautions Dombo.
  2. Adequacy of insurance cover

    A common problem encountered when an incident occurs and a claim is submitted is that policyholders realise that they are inadequately insured. 

    "Most insurers will only pay out a portion of the actual loss in the event that the policyholders is underinsured,
  3. Outstanding premiums

    A common and unfortunate insurance blunder is when an insured believes they are covered but actually aren't. 

    Dombo says that should an insured either knowingly, or unknowingly, have outstanding in premiums, the insurer may totally reject the claim.

    "It is the responsibility of the insured to advise the insurer of a change in banking details or payment method timeously, and a rejected debit order could lead to non-payment of a premium and consequently the total rejection of a claim. 

    "A very costly error made by the insured is simply forgetting to notify their insurance company of their change in details that may affect the payment of the premium," he says. 

    An worse case scenario is when the insured fails to notify the insurance company of a change of new banking details, consequently the debit order is rejected by the bank and the insurance policy becomes void. 

    In this case, the insured's banker should advise the client of the rejected debit order immediately, however, if in the interim a vehicle valued at R250 000 is either stolen or involved in an accident, the insured's insurance policy could be null and void and they would be liable for the full replacement costs of the vehicle.

    Failing to meet the basic claim requirements

    Failing to meet the basic claim requirements could result in a rejection of the claim by the insurer, warns Dombo.

Some of the basic claim requirements are:

1. Reporting the incident to the police and obtaining a SAP case number.  Some insurers specify a time period in which to report the incident. 

2. Proof of value and ownership of the items lost

3. Prohibition of disposing of any items unless authorised by the insurer

4. Repair or replacement of damaged or lost items unless the insurer has authorised the insured to do so

5. Declare any pending prosecutions you may be aware of following the event so that the insurer is able to defend the insured.

Dombo strongly advisers policyholders to carefully examine their insurance policy or contact their insurance broker to ensure that they are aware of their basic claim requirements.

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