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The onus of proving a claim under lockdown

07 April 2021 Myra Knoesen

We summed up some case studies from the Ombudsman for Short Term Insurance’s (OSTI) briefcase, which we thought would be interesting for our readers.

Insurance claim during lockdown

On 3 May 2020, Mr C submitted a motor vehicle insurance claim to the insurer which was rejected on the basis that Mr C contravened the Disaster Management Act Regulations 2020, more specifically Regulation 31 (2) under both the Level 4 and 5 protocols set in place by government.

Mr C said that the accident occurred after he had just received a permit to return to work on 4 May 2020. Mr C was relocating from one residence to another and was travelling to get his laptop which he needed for his return to work the next day.

Mr C approached OSTI for assistance because he felt that his claim had been unfairly rejected. OSTI requested the insurer to provide a copy of the policy wording and to highlight the relevant policy provision that it relied on to justify its rejection of the claim.

The insurer’s response

The insurer advised that when it investigated the accident, the following was established, which had a material impact on its decision to reject the claim:

“In an interview conducted with the complainant, it was established that the accident event occurred at about 18:00 on 3 May 2020, when the complainant was travelling along the Golden Highway near Lenasia South. The complainant had a passenger in his vehicle at the time of the accident event. The complainant and the passenger had both confirmed that they had, during the lockdown (Alert Level 5) on 26 April 2020, travelled from Soweto to Orange Farm to the complainant’s second residence. Travelling was severely restricted and only allowed under strict directions. Both the complainant and his passenger further confirmed that on 3 May 2020, when the accident event occurred, they were travelling from this residence in Orange Farm back to Soweto. Under Lockdown levels 4 and 5, persons had to remain home and were only allowed to travel under certain circumstances. The complainant was not performing an essential service. The complainant was not moving to a new residence. The complainant was not returning to his place of residence before lockdown; and the complainant was not moving children nor attending a funeral. Therefore, the relaxation on the restriction of movement did not apply to the complainant’s social movement between his households as was the case when the event occurred. It was noted, at this stage, that the complainant was in possession of a work permit which specifically allowed him to travel between his residence in Chiawelo, Soweto to Bryanston (his place of work). However, this permit did not provide for the travelling between Orange Farm to Soweto, which was the route the complainant was travelling when the accident event occurred, and therefore, the complainant failed to have the required permissions to travel between these two locations and was, consequently in contravention of the Regulations. In consideration of the Regulations and the date of the accident event, it is clear that the complainant, by being on the road when the accident event occurred, had contravened the Regulations in that his purpose for being on the road was not for any of the instances as provided for in terms of Regulation 16(2). The level 4 Regulations took effect from 1 May 2020, and therefore when the accident occurred, the complainant was in contravention of Level 4 Regulations. The complainant had increased the insurer’s risk in that, firstly, he was doing so in contravention of both the Level 5 and Level 4 Regulations, respectively. Secondly, if he had complied with the Regulations, it would have invariably reduced the insurer’s risk to the extent that the accident event would not have occurred in the first place as the complainant would not have been on that road or travelling that route at all. As a result of the above submissions, this formed the reasoning which underlies the repudiation of the complainant’s claim...”.

The insurer also said the following clause from the policy schedule allowed them to repudiate claims where the insured or driver of the vehicle breaks the law:7 “If you or the driver driving your car does not have a valid driver’s license, or if you break the law”.

OSTI advised the insurer that its response did not address the materiality of the policy exclusion to the loss itself. In other words, the insurer had not shown that the accident was caused by the insured breaking the law. OSTI found that there was no causal connection/link between the breach of the law and the accident. Accordingly, OSTI recommended that the insurer settle the claim.

Mr S and his travel insurance claim

In January 2020, Mr S booked a vacation to Switzerland at a cost of R76 302 for his spouse, his son and himself. Mr S took the premium insurance package for himself and his spouse because it was a total inclusive insurance package that included all issues, like “force majeure”.

After South Africa imposed a travel ban due to the Covid-19 pandemic lockdown, Mr S contacted the travel agency for a refund. The travel agency advised that it was not in a position to refund the full amount that he had paid. The agency was, in terms of its rules, only in a position to refund an amount of R11 481 as, at the time of the cancellation, Mr S had fallen into the 80% loss bracket. Mr S then filed a claim with the travel insurer for an amount of R50 868.

Mr S’ claim was rejected on the basis that the Covid-19 pandemic is not a covered peril in terms of the policy. The insurer advised that the policy provides cover for specific perils and the circumstances under which the insured’s travel plans were cancelled, did not fall within the covered perils.

Mr S approached OSTI for assistance. OSTI requested the insurer to advise why the loss was not covered. The insurer explained that there had been an error in the way that the wording was presented in the policy documentation. The policy wording was corrected by the insurer and following engagements with its management, the insurer decided to reconsider Mr S’ claim, and agreed to settle the claim.

Mrs M’s stolen vehicle

On 21 July 2020, Mrs M’s car was stolen while she was staying with her brother in Brakpan, Gauteng. She submitted her claim to the insurer and on 14 August 2020 she was informed that her claim had been rejected because she had failed to update her residential address, from Bloemfontein to Brakpan, with the insurer.

Mrs M approached the insurer’s internal dispute officer to express her dissatisfaction with the rejection of her claim. On 4 September 2020, Mrs M was informed that the initial decision to reject her claim was overturned and that the insurer would settle the claim on a proportional basis by deducting the percentage of the premium that would have been paid to the insurer if Mrs M had updated the address on the policy. The insurer explained to Mrs M that the reason it had deducted 29,12% from her claim was because she had been based in Brakpan, Gauteng, for two months and had failed to inform the insurer about the change of her risk address during that period.

The insurer said that since it had only received 70.88% of the correct premium, it would only pay 70.88% of the claim.

Mrs M said that the insurer was not acting in good faith and deemed the insurer’s decision to be unfair because she was initially visiting her family on a temporary basis. She said that she had no choice but to remain in Gauteng due to the Covid-19 pandemic lockdown. 

OSTI noted that Mrs M did not move to Gauteng permanently but remained in Gauteng due to the national lockdown. The vehicle had been at the “new” risk address for only one month before being stolen and, therefore, OSTI was of the view that a proportional settlement was inappropriate. OSTI requested the insurer to rather settle the claim by deducting the actual difference in premium for the month that the vehicle was at the “new” risk address.

Writer’s Thoughts:
Again, these cases remind us of the importance of brokers in helping clients understand their policies… policy provisions, terms and definitions! Do you believe the lockdown was valid reason to reject claims? If you have any questions please comment below, interact with us on Twitter at @fanews_online or email us your thoughts -



Added by Fred Kitching, 07 Apr 2021
I am in complete agreement with the comments made by both Cliff and Simon. I'm astounded by the low level that some insurers will stoop to, in order to repudiate a legitimate claim. I similarly agree that in cases of this nature, the names of the risk carriers should be divulged.
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Added by Myra, 07 Apr 2021
Thanks for the comments Cliff Taylor and Cynical Simon.

@Cliff there are many potential pitfalls in the area of cover, as evidenced by these case studies published. I, however, think that complicated principles need to be made easier to understand for the client in a clear, concise and effective manner. The pandemic also serves/ed as a reminder that as circumstances change, policy wordings need to be reviewed regularly for any exclusions that could apply.

@Cynical Simon I agree with your point on OSTI. At least the insurers in the cases above all agreed to settle the claims.

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Added by cynical simon, 07 Apr 2021
These cases highlight the sad fact that some insurers would grasp at any straw in order to get out of claims, It is further a regrettable fact that some policy wordings from the outset allows for idiotic claims repudiation on spurious grounds, though it appears that if they don't have a policy condition to support their decisions, they come up with something as remote and unrelated as the draconic and irrational lockdown regulations. .One would think that it goes without saying that one does not need the Osti to tell you when something is dead wrong. But Alas! Apparently , not so.
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Added by Cliff Taylor, 07 Apr 2021
Writer's thoughts - per your comment I believe that its not the clients' problem in understanding the policy wording but that of the insurers in question !!
I believe in cases of this nature the name of the risk carrier should be divulged.
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