Here are the main reasons why your insurance claims are rejected

The Ombudsman for Short-term Insurance recently published data on the number of complaints it received in 2014.

Majority of complaints in SA relate to motor insurance at 46.9%, and houseowners’ insurance at 20.9%.

The role of the office of the Ombudsman for Short-term Insurance is to provide an independent, fair and cheap dispute-resolution service to the public.

The Ombudsman said it received 10,253 complaints in 2014, up 9.5% from 9,368 complaints in 2013, and from 9,144 complaints received five years ago.

The rand value of complaints resolved in favour of the insured was down to R116 million, from R119 million 2014, and R136 million in 2009.

BusinessTech questioned Dennis Jooste, the Ombudsman for Short-term Insurance, on the the top reasons why insurance claims get rejected.

Motor insurance:

  • An unlicensed driver was at the wheel.
  • Driver not the ‘regular driver’ – Joste cautioned that some policies cover the regular driver only, while others cover a named driver or any licensed driver.
  • An unroadworthy vehicle – Jooste noted that claims can be rejected for smooth tyres, or faulty wipers.
  • Drunk driving.
  • Telematics data – some policies require a telematics device to the insured vehicle, which can reveal driver fault.
  • Satellite tracking device not fitted.
  • Security device not fitted – this relates to an alarm or other security measures to protect vehicle theft, Jooste said.
  • Total-loss policy – applying when the vehicle is a total write-off.
  • Material non-disclosure at underwriting stage.
  • Vehicle and business use.
  • Mechanical breakdown – insurers reject claims on the basis that the insured vehicle was not serviced according to the manufacturer’s specified service intervals.
  • Leaving the scene of an accident unlawfully.

Homeowner’s insurance

  • Unoccupied premises. According to Jooste, if a home is unoccupied for a fair amount of time the insurer may have grounds to repudiate a claim.
  • What is a fixture, what is immovable, and what is a moveable item. “Homeowner’s insurance covers you for permanent fixtures only,” Jooste said.
  • Perils – Homeowner’s insurance typically covers storm and fire damage, while design and workmanship related faults are not generally covered.
  • Retaining walls – required to be built according to engineering specifications

Additional miscellaneous rejection reasons

  • With regards to mobile phone insurance, insurers reject claims on the basis that the SIM card noted on the policy schedule was not being used with the insured device at the time of the loss/damage, said Jooste
  • On all types of insurance, insurers reject claims if the policyholder or anyone covered under the policy fails to comply with the insurer’s reasonable request for information during the insurer’s validation of the claim, such as cellular phone beacons and billings reports, Jooste said.

“With regards to all types of insurance, if the policyholder or anyone covered under the policy gives incomplete of inaccurate information at claim’s stage, insurers reject the claim,” the Ombudsman said.

Jooste concluded that inflated and fraudulent claims are a big cause for concern in the industry.

“Most policies carry a forfeiture clause, so if you are caught out, you may have to forfeit all benefits under the policy.”

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Here are the main reasons why your insurance claims are rejected