Imagine a heavy midnight storm hitting your home, and you wake up to the pitter-patter sound of rain… inside your house. Your only sense of relief comes from believing that your building insurance covers damage to ceilings and walls and that your plush mohair sofa and genuine wool carpets will be swiftly replaced by your household contents cover… Until you get a notification from your insurer that your claims have been rejected because your gutter maintenance fell a few years behind!
The purpose of insurance of any kind is to offer peace of mind and help you bounce back quickly when disaster strikes. Not only is it disappointing when insurance claims get rejected, but it can be financially debilitating or lead to major long-term inconveniences.
Why insurance claims get rejected
Insurance claim rejections in South Africa are often a result of not fully understanding the policy or making one of many common claim mistakes. Here’s a list of the top 20 reasons why insurance claims get rejected:
- Non-disclosure of material information
Your insurer might reject your claim if you forget to disclose relevant details at policy inception. For example, if you take out car insurance and don’t mention that the vehicle is used for business deliveries, your insurer may deny a claim if the car is damaged while making a delivery.
- Policy lapses
If you miss any premium payments, your insurance policy may lapse, and claims will be rejected.
- Incorrect or incomplete documentation
Even if paperwork is the last thing you feel like doing, it’s important to understand each and every document that your insurer needs to process your claim. Insufficient evidence or missing paperwork could result in your insurance claim being rejected.
- Exclusions in the policy
Make sure that you understand exactly what your policy covers and what is excluded. Claims for something explicitly excluded in the policy wording will likely be rejected.
- Wear and tear or maintenance issues
Although insurance protects your property, you still have a responsibility to care for it. Not attending to regular maintenance could result in insurance claim rejection – much like the storm damage claim we mentioned earlier.
- Misrepresentation or fraud
Some might consider making a quick buck by submitting claims for items that weren’t affected by an incident. For example, it’s fraudulent to claim that expensive jewellery was stolen during a burglary when all the thieves took was an old laptop. Your insurer can reject the entire claim and even take legal action against you.
- Unlawful activities
If you’re caught street racing and crash your car, don’t expect your insurer to cover the damage. Claims for losses resulting from illegal activities, like reckless driving or using a vehicle for crime, will be rejected.
- Lack of security compliance
Not adhering to security requirements stipulated in your policy could affect your insurance claim. Ensure that your property’s alarm system and vehicle tracking devices are fully functional, and memberships are active.
- Underinsurance
If your sum insured is too low, your insurance claim may only be partially covered, or rejected completely. Ensure that your belongings undergo a thorough valuation and that high-value items have a certificate of authenticity to ensure full coverage.
- Commercial vs. personal use
If you start using your personal car as an Uber or delivery vehicle, you’ll need to discuss vehicle insurance that covers business use. Personal vehicle insurance claims are likely to be rejected.
- Late notification of a claim
When something bad happens, call your family first and then your insurer. Not reporting the incident within the required time frame could result in insurance claim rejection.
- Driving under the influence
Motor claims are always rejected when the incident is a result of intoxicated driving.
- Unauthorised repairs or changes
Be careful not to rush repairs without undergoing an insurer assessment. Insurers work with preferred suppliers and will often reject or underpay claims for unauthorised repairs.
- Failure to meet policy conditions
All insurance policies carry responsibilities for the insured person. Make sure that you know what policy stipulations and conditions are, such as security measures, what activities are covered, or what kind of maintenance must be done.
- Incorrect use of property
Insurance claim rejections often occur when people use a property for different purposes than declared. For example, your homeowner’s insurance may reject a fire claim made on your residential house if the fire resulted from the home being used as a bistro.
- Acts of war or civil unrest
Most insurance policies carry exclusions for damages caused by riots, strikes, or war.
- Unlicensed or expired license holders
Hide your car keys from your teens! Motor claims are always rejected when the driver is unlicensed and even when a legitimate license has simply expired.
- Pre-existing damage
Damages that existed before a policy inception won’t be covered in a claim.
- Illegal or non-compliant structures
The SANS 10400 building code governs structures in South Africa, and claims for damages or losses resulting from buildings not complying with regulations are typically rejected.
- Failure to disclose additional risks
It’s important to inform your insurer of material risk changes. For example, if you’ve moved from a high-end gated community to a remote, outlying area without informing your vehicle insurer, a car theft claim may be rejected.
How expert insurance brokers help reduce claim rejections
Insured events are scary enough without having to try to understand why insurance claims get rejected. That’s why having a broker in your corner makes such a difference to your experience. Here are the top 5 reasons you need an experienced and skilled broker:
- A broker will make your cover easier to understand by explaining it in simpler terms.
- Your insurance needs are unique, and being adequately covered needs a tailored policy or specialist cover. A broker will help to minimise gaps in cover for what matters to you most.
- An insurance broker will negotiate pricing and cover for exactly what you need, saving you money in the long term.
- A broker understands claims processes and requirements and will be able to guide you for swift, best-case insurance claims.
- Your life changes, and so does the insurance landscape. A broker will help to make sure that your cover is just right for every new chapter of your life.