Motorists most aggrieved with short-term insurers
Consumers claw back R95m in claims
Although only 19% of motor vehicle claim disputes were resolved in favour of the insured consumer, the sector watchdog put R47.7m back into the pockets of these consumers.
Consumers with insurance covering their cars lodged the most complaints with the Ombudsman for Short-Term Insurance (Osti) last year, and most of these complaints had to do with the amounts paid out by insurers on settling accident claims, the latest annual report by the Osti shows.
The ombud says that in these disputes, vehicle credit shortfall and uninsured accessories were dominant issues.
Vehicle credit shortfall is the gap between the insured value of your car (when you have comprehensive motor vehicle insurance) and the amount owing to the bank or finance house.
The Osti says that standard comprehensive motor vehicle insurance doesn’t necessarily cover the total amount owed to the bank when it has financed a vehicle.
If a vehicle is stolen or written off in an accident, the credit shortfall can be crippling because you’re left owing money on a car that you no longer have, the ombud says.
You must, therefore, ensure that your policy includes cover for credit short-fall and any financed accessories which have been added to the vehicle.
But the Osti advises that these cover options are, in most cases, offered at an additional premium and administered under the insurer's terms, conditions and exclusions.
The annual report says the second-biggest cause for complaints relating to car cover was for claims rejected due to non-disclosure or misrepresentation by consumers at the sales stage.
This is when you fail to tell a new insurer the full truth about your claims history or you misrepresent who will be the primary driver of the car. It often happens that parents claim they will be the main driver of the car when in fact it will be their young adult child. In such cases, had you disclosed the full truth you would have paid a higher premium.
The Osti says that in 2018, there was a 22% decrease in the number of these complaints when compared to the previous year. And in 2019, there was a further 20% decrease.
This is attributed to the ombud highlighting the importance of providing truthful and accurate information to your insurer during the underwriting of the policy, as well as the insurer’s obligation to conduct the sales process by agreed industry codes of practice and the Policyholder Protection Rules, the annual report says.
Another type of complaint that is on the decline is the rejection of claims due to consumers allegedly driving under the influence.
“Last year, the Osti dealt with 238 complaints relating to the rejection of claims on the grounds that the insured was driving under the influence of alcohol.
“In 2018, the ombud recorded a 15% decrease in such complaints when compared to the previous year. The statistics in 2019 show a further 13% decrease,” the annual report says.
The ombud says this is encouraging because it shows that consumers are using e-hailing services, such as Uber, and that insurers are providing their customers with chauffeured services.
But the annual report does caution consumers that these claims can be rejected on the strength of circumstantial evidence alone. In other words, you need not have been tested for alcohol by way of a breathalyzer or blood test, nor convicted of a criminal offense concerning the incident.
Edite Teixeira-Mckinon, the chief executive officer at the Osti, says an insurer doesn’t need to prove beyond all reasonable doubt that you were driving under the influence. They need only show that on a balance of probabilities that you had had too much to drink.
“They will look at how the accident happened, the time, the day, the witness accounts which speak to the driver’s demeanour: was the driver unable to stand up straight, was his speech slurred, were his eyes bloodshot. Insurers also get footage from roads and bars, and can ask you for your restaurant bill or interrogate the person who served you. There are so many ways of uncovering the truth,” she says.
The annual report says, however, that in previous years, some insurers relied on insufficient circumstantial evidence to justify their rejecting these claims, in which case the Osti would overturn the insurers’ decisions. “Perhaps these statistics also indicate that insurers are validating driving-under-the-influence claims in a fairer manner,” the annual report says.
Although only 19% of motor vehicle claim disputes were resolved in favour of the insured consumer, the Osti put R47.7 million back into the pockets of these consumers out of a total of R94.9m that was recovered for consumers, the report says.
While motor vehicle claim disputes made up 49% of all complaints to the Osti, homeowners/building claims comprised 20%, commercial claims 8% and household content claims 6%. The remaining 17% of complaints were non-claim related or related to other types of cover.