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Consumers can learn from short-term insurance complaints contained in the latest annual report of the Ombud for Short Term Insurance (OSTI), such as how important it is to specifically insure your appliances against power surges, how to claim after a burglary and why it is important to maintain your car in case of an insurance claim.
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A consumer complained that his insurer rejected the claim to replace his television set after it was damaged by a power surge, because his policy did not provide cover for this kind of damage. The insurer referred to the terms and conditions of the policy that only provided cover for certain “insured events” – which did not include power surges.
The consumer then resubmitted the claim and explained that he had used the incorrect cause of damage as the television was damaged by lightning. He also provided a report from his service provider that confirmed that the cause was lightning, but the insurer did not re-evaluate his claim.
The insurer said the consumer initially registered the claim for damage to his television due to a power surge and not lightning. The insurer did review the claim upon resubmission. The consumer then argued that the report provided by the South African Weather Service was not accurate and could not be used to decline liability.
He wanted his claim to be paid because his service provider confirmed that the damage was the result of an insured event. Upon investigation, the ombuds office found that the damage report was dated after the consumer resubmitted his claim and also did not indicate the reasons for the service provider’s conclusion.
The weather report could not be ignored and provided the insurer with evidence that, on a balance of probabilities, the damage could not have been due to lightning as there was no lightning activity on the day.
The ombud explained that the policy the consumer relied on is a peril-based policy that means that the insured bears the onus of proving on a balance of probabilities that an insured event, as listed in the policy, was the proximate cause of the damage.
Due to the inconsistencies regarding the cause of damage and lack of information on the report from the insured’s service provider, OSTI could not uphold the complaint.
In another case, a consumer had a dispute with her insurer who said her stove and fridge stopped working and provided a report by her service provider stating that the main PC board was faulty. She provided replacement values for the damaged items, but this service provider’s report also did not specify the cause of damage.
When requested, the service provider stated that the damage to the fridge’s main PC board was possibly caused by a high voltage or fluctuation in power caused by load shedding which had caused the motor to burn out. No photographs were included in the report.
The insurer appointed an assessor to verify the cause of damage, but the consumer had already discarded the fridge. The insurer argued that it could not verify the cause of the damage but agreed to pay out the replacement value of the appliances and deducted an amount of R999.00 for the salvage value and agreed to waive the power surge excess of R1,500.00.
The insurer argued that it was entitled to take possession of the fridge as salvage and that it was prejudiced by the insured discarding the fridge. The consumer then disputed the settlement offer. The ombud agreed with the insurer and the claim was paid out.
When an insurer indemnifies an insured for damaged items, it is entitled to take possession of the salvage. It is also entitled to assess the damaged item. The insurer based the settlement offer on the replacement value submitted by the insured’s own service provider.
OSTI found that the insurer would have been entitled to reject the claim for the damage to the fridge on the ground that it was not able to assess the damage. It was fair and reasonable to make a settlement offer, less the salvage value.
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A consumer complained after a burglary at the garage at his home. The claim was validated and approved and the insurer offered the consumer a settlement amount of R10,000 on the basis that there were no signs of forced entry into or exit from the garage.
The consumer was not happy with the amount and approached OSTI. He did not agree that there were no signs of forced entry into or exit from the outbuilding. He said the outside security cameras were broken and the electric gate was forced open.
An assessor was appointed and reported the consumer was woken up by the house alarm. He switched it off and checked outside to see if there was anyone on the property. As there was no indication of any break in, he turned the alarm back on.
The next morning, the consumer discovered various items were stolen from the garage, but the assessor found that the side door was not locked at the time of the incident and there were no signs of force or violent entry. However, the burglar broke a beam at the front gate before climbing over.
The insurer relied on the policy provisions that compensation following forcible entry or exit will be up to the sum insured for theft where there are clear signs of forced entry to or exit and that theft from your outbuildings without force is covered up to R10,000.
OSTI found in favour of the insurer because the consumer failed to provide evidence showing that there was forced entry into or exit from the outbuilding.
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A consumer complained that the engine of her car sustained damage when the timing chain and tensioner failed after it was serviced. She reported to the dealer that a noise was coming from the engine when she started it.
Her husband fetched her car after the service and when he enquired about the noise, he was told the car was fine and fit to be driven. No additional repairs were done. Two days later, the vehicle would not start and upon inspection, the dealer informed the consumer that the engine was damaged and had to be replaced.
She submitted a claim to her insurer, who rejected it and she disputed the rejection, saying that the dealer did not give them a quote for the replacement of the timing chain and tensioner. She also stated that her husband was not informed that parts needed to be replaced to prevent damage to the engine.
An assessor was appointed to assess the cause and extent of the damage and reported that valves in the engine had bent when the timing chain failed. He stated that the timing chain was trenched and the tensioner broke into two pieces. The plastic timing chain guides were worn to the extent that the timing chain was touching the steel on the sides. This was evidence that the vehicle was driven in this state for a period of time.
According to the technician, he told the consumer’s husband that the timing chain and tensioner had to be replaced and showed the assessor the quotation. The insurer argued that the noise in the engine could not have disappeared after the service, since the timing chain and tensioner were not replaced.
OSTI found that the insurer had made out a case that the timing chain and tensioner were worn before the failure of the engine. The consumer failed to keep the car in a proper state of repair by not conducting preventative maintenance to protect it from further damage.
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Call OSTI on 0860 726 890 or visit the website at https://osti.co.za/.
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