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We can always learn from what happens to other consumers when their short-term insurance complaints are rejected. According to the case studies in the Ombudsman for Short-Term Insurance’s annual report released last week, consumers still try to lie about driving under the influence of alcohol, while insurers are sometimes caught out for not basing their rejection of claims on facts.
A consumer claimed for accident damage to his car, but the insurer rejected it on the basis that he was driving under the influence of alcohol. The dispute was about whether the insured was under the influence of alcohol at the time of the accident and whether the insurer had sufficient evidence to reject the claim on that basis.
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The insured rear ended another vehicle, causing damage to both vehicles. He argued that a criminal case for driving under the influence of alcohol had been opened but withdrawn by the prosecutor.
He said this confirmed there was insufficient evidence to prove that he was driving under the influence for the insurer to uphold the rejection, but the insurer confirmed that the claim was rejected because he was driving under the influence of alcohol at the time of the accident and because he did not give the true facts until the insurer got the evidence at assessment stage.
The insurer pointed out that the burden of proof in a civil matter is one of a balance of probabilities, which is less onerous than in a criminal case, where the state must prove its case beyond a reasonable doubt.
Therefore, the fact that the criminal case was withdrawn had no bearing on the civil case, as the two matters have a different burden of proof. The state can also reinstate proceedings at any time despite the case being withdrawn.
The section of the policy wording the insurer relied on to reject the claim about driving under the influence of alcohol, does not require the insurer to only consider a blood result, indicating that the insured was driving with a blood alcohol level in excess of the maximum allowed in legislation, as the policy does not require this.
The policy exclusion provides that the insurer is not liable for loss or damage due to the insured being under the influence of alcohol, drugs or any other substance not prescribed by a registered medical professional.
Therefore, the insurer must prove that the insured was driving while under the influence of alcohol and can rely on factual evidence, such as witness testimony and documentary evidence, to prove that on a balance of probabilities, the insured was driving under the influence of alcohol at the time of the accident and that it influenced the insured’s driving ability to decline the claim. The fact that no blood result may be available is not important to reject the claim.
The short-term insurance ombudsman agreed with the insurer’s decision to reject the claim.
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Another consumer claimed for damage after strong gale force winds caused a gable wall, which held his satellite dish, to collapse. The insurer conducted its own desktop assessment of the damage and its damage report stated that the section of bricks must have been cracked or loose due to poor building practice as this kind of damage cannot be caused by wind alone.
The insurer argued that the damage to the gable wall was not due to an insured peril but is due to a defect and poor building practice that is excluded from cover and rejected the claim based on the general policy exclusions that include loss or damage due to lack of servicing, maintenance, cleaning, repairing, gradual deterioration or wear and tear, as well as loss or damage due to defects in design, alterations, repairs or construction that do not meet SANS standards.
The ombudsman must always be satisfied that a damage report is based on sound reasoning that resulted in the conclusion determined by the expert. However, the ombudsman found that the insurer’s damage report was based on what the assessor described as “must have been”.
The assessor’s findings were not based on admitted or proven facts and amounted to speculation and the insurer’s assessor did concede that the wind did contribute to the damage being claimed for, by stating “this cannot be caused by wind alone”.
Therefore, the ombudsman determined that the insurer did not discharge the onus to prove the damage was not caused by wind, which would have entitled the insurer to reject the insured’s claim. The ombudsman recommended that the insurer settle the claim.
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A home industry business claimed for lost sales and stock under the business interruption section of its commercial policy after the floods in KwaZulu-Natal during April 2022 because the floods disrupted electricity and water supply to the area. The roads were either washed away or completely flooded which prevented deliveries.
The insurer rejected the claim because business interruption cover only applies when the insured premises suffer damage and the business is interrupted as a result. The insurer submitted there was no damage to the building and therefore, the business interruption section of the policy was not triggered.
The ombudsman said to have a valid claim under the business interruption section of the policy, there must have been damage at the insured premises, the insurer must have admitted liability for the damage under one of the covered sections and the damage must have interfered with or interrupted the business.
The description of the loss did not meet the criteria for cover under the business interruption section and the ombudsman found that the business did not bring the claim within the ambit of cover provided by the policy and therefore, the insurer was not liable for the loss of sales and stock.
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