Late claims shouldn't always be rejected

When you’re late in submitting a claim to your insurer, your insurer is at liberty to reject it. But the Ombudsman for Short-Term Insurance (Osti) looks at more than your failure to comply with the timelines specified in your policy. The Osti also applies the principles of “fairness and equity”.

The Osti’s office often receives complaints about claims that have been rejected as a result of policyholders failing to do what’s required of them in terms of the policy, a recent media release issued by the ombud says.

Following the claims procedure and complying with the time limitations in a policy are important if you want your claim paid.

Every policy sets out your obligations in the event of a claim. This includes the time period within which a claim must be reported to the police and your insurer, which towing operator you may appoint, what information you must provide to your insurer, what you should and should not do at an accident scene, the period of time within which to dispute the outcome of a claim, etc. 

“Failing to adhere to these obligations may prejudice the assessment of your claim and may provide your insurer with grounds to reject it,” the Osti says.

The Osti says in circumstances where a breach by you is not material or will not prejudice your insurer, the ombuds’s office will take into account what is fair and reasonable in the circumstances.

The ombud cites the example of Mrs S, who had a legal expenses insurance policy which covered the conveyancing costs (of the purchase of a property) up to a maximum of R6,000. 

Her insurer rejected her claim on the grounds that the claim was submitted late. Mrs S had bought a property that was registered in her name in 2016. However, she only submitted a claim to her insurer for the conveyancing costs in 2018. 

Mrs S said in her complaint that she was not aware that her policy covered conveyancing costs. 

Her insurer stated that her policy was clear and that she was required to submit a claim within 30 days of the insured event. 

The insurer argued that the significant delay in reporting the claim prejudiced its assessment of the claim, because it would be unable to verify the event. 

But the Osti’s office found that, other than the late notification, Mrs S had a valid claim in terms of the policy. Since her insurer couldn’t demonstrate what actual prejudice it had suffered by the late notification, the ombud asked the insurer to reconsider and settle the claim based on the conveyancing tariffs applicable in 2016. The insurer settled the claim.

But don’t be casual or tardy when you need to claim. 

Jahwyer Accom, the head of client care at Santam, provides the following examples of cases where the ombud upheld Santam’s decision to reject late claims.

The client submitted a claim for her garage door she said was damaged on 5 November 2019. On 14 November, she had the door repaired, but submitted the claim on 19 November.

The client argued that the repairs were done before the claim was submitted because there was a sense of urgency. Yet the repairs were done more than a week after the damage is said to have occurred.

Santam found that the repairer replaced the garage door’s automation, and reported that “the shaft of the garage door was chain-driven and the chain broke”. The supplier only had belt-driven shafts,  which cannot be used to operate a heavy garage door, so they installed a new automation. 

Having been denied the opportunity to assess the damage, Santam asked to see the salvage to assess the motor and establish the proximate cause of the damage. But the client’s repairer had already disposed of the salvage. 

The claim was rejected and the Osti upheld the rejection of the claim, Accom says.

In another case involving Santam, the client was rear-ended by a third party. He decided that the third party should repair his vehicle, but he was unhappy with the repairs so he submitted a claim. 

“At the claims stage, it was impossible to establish what damage had been caused by the incident, what had been caused by the repairer, and what had been caused at any other stage. The prejudice to the insurer could not be overcome,” Accom says.

Anton Ossip, the chief executive of Discovery Insure, says it’s important that clients view all claims as time-sensitive, to ensure you have the best chance of having your claims honoured. 

He says each claim is assessed on its own merits, and the insurer considers the time period for notification; the reason for the delay; and was there an apparent intention to deceive or thwart the claims investigation. 

“We consider the actual prejudice in these cases by, for example, the fact that evidence of the incident was available and is no longer. Witnesses attended the scene but now cannot be traced, etc.,” Ossip says.