Legalities around household contents insurance: Prevalent problems & possible solutions

insurance claims
14 Sep 2023

During 2022 there were various media reports about a significant rise in home insurance claims. Complementing these reports was the announcement by the short-term Ombudsman’s office that there had been a rise in disputes relating to home insurance claims. There were many reasons attributed to this rise, but power cuts were the main reason.

Given the events of the recent past, many homeowners have since procured home insurance policies. Others are either self-insured or they manage potential risks, mainly due to financial constraints. Procuring cover is undoubtedly an important step towards guarding against risk. However, that is only a start – ensuring that there is adequate cover in place is more important and requires proactivity on the part of the insured. Whilst this may seem tedious and cumbersome, such proactivity may be a saving grace at the claiming stage. It is essential to look into some of the legalities around household contents insurance.

Along with loadshedding, which causes power surges, there has been an increase in opportunistic crime, such as burglaries. In was reported in Moneyweb that burglaries had increased by 3.2% during loadshedding and this figure had doubled to 8% during loadshedding on weekends. At this stage, burglaries are possibly the most prominent source of home insurance claims. There are also many other risks that may lead to home insurance claims.

Like other kinds of insurance claims, home insurance claims present their own unique challenges at the claiming stage. Whilst each case presents its own difficulties, there are common problems that frequently come up in home insurance claims. Under-insurance is a major one and refers to a situation where the sum insured is less than the value of the insured property or the cost of its reinstatement. Secondly, the disputes often stem from disagreement whether the destroyed/lost insured property should be repaired, replaced or reinstated. Whilst an insured would prefer to have his/her property replaced, an insurer would rather repair when an item is not stolen. Thirdly, disputes also arise from a refusal or failure by an insurer to pay for certain destroyed/lost items. In addition, disputes arise over “ownership” of certain items. Insurers insist on proof of ownership and the insureds are not always in possession of proof of ownership for all their belongings. In fact, in most cases, they are without such proof.

There are ways that have been invented over the years to address most of the problems addressed above. In relation to under-insurance, the legal principle “average” would ordinarily apply. For more information regarding this principle, see the article by JP Rudd – https://www.golegal.co.za/underinsured-policy-claim/. For our purposes, it suffices to state that, in general, being underinsured entitles an insurer to avoid a claim. Where a policy has an average clause, it would kick in. With regard to whether a destroyed property should be repaired, replaced or reinstated, the policy wording would ordinarily regulate the position. Where there is a dispute with regard to the items which were destroyed/stolen, having an inventory may assist in proving that you, the insured, owned such items. Alternatively, any form of documentary proof that may be available may be used. In reference to proof of ownership, things such as – photos/pictures, receipts, confirmatory affidavits by friends, family, neighbours, relatives, etc., purchase agreements, bank statements, etc., may be used to prove ownership. Some policies do cater for instances where ownership cannot be proven – they, for example, provide that only a certain percentage will be paid by the insurer. To mitigate against such difficulties, it is recommended that the insureds endeavour to keep proof of ownership of their items; prepare and routinely update an inventory and send these to their broker and/or insurer.

Home insurance claims may present complex problems. In such cases, an insured would need to involve his/her own assessor to try and challenge the assessment report from the insurer’s assessor. Importantly, an insured must be honest and provide all the available, helpful information and documentation, so that a claim is not prejudiced. Whilst it may be impractical to keep proof of ownership for all one’s items and belongings, it is advisable to keep some proof of ownership, particularly for the more valuable items.

Article sourced from Adams & Adams.

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(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)
Mtho Maphumulo

Mtho Maphumulo graduated at UKZN with several distinctions, academic awards and Dean’s Commendation. During this period, he served active leadership roles in many students’ organisations including the Black Lawyers Association... Read more about Mtho Maphumulo

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