Business Brief

Insurance is considered by many as a grudge purchase that is made to ensure that life’s unexpected hiccups do not throw finances off kilter. However, having insurance cover does not guarantee that a claim will be paid out and insurers have the right to deny a claim under certain circumstances. Here is what policyholders need to do to ensure their vehicle and home claims are paid out.

Honesty is the best policy

Applicants must be transparent and honest when applying for short-term insurance. They must supply as much information as possible and let the insurer decide what is relevant and irrelevant. For example, applicants must be transparent about including their previous insurance claims history. Also, they must understand the difference between personal and business use of a car. For example, using a car to drive to and from work is still classified as personal use. However, if using the car to visit clients regularly (for example, a sales representative) or having to use the vehicle to deliver goods – that would be classified as business use. Applicants must be careful not to specify that the car is only for personal use if it is also used for what would be classified as business use.

Who is in the driving seat?

An insurer will ask who the regular driver of the car will be. In other words, who will drive the car most of the time? Applicants must let the insurer know if, for example, their spouse also drives the car. Some insurers are happy to pay a claim as long as the driver behind the wheel is licensed. However, some policies stipulate a “regular driver”. If this is the case and it was not specified that a child, husband or wife is a driver, the claim could be rejected. If there is a young driver in a household, mentioning this to the insurer is important. Insurers usually charge an additional excess fee (the first amount payable before a claim is paid out) for drivers under 25, but if this was not declared or a policyholder is dishonest about who was driving the car when the claim was made, the insurer can decline the claim.

Stay up to date with premiums

In terms of the Short-Term Insurance Act 53 of 1998, policyholders are entitled to a 15-day grace period within which to pay their premiums. If they have financial constraints and need to skip a payment, they need to call the insurer to advise. Most insurers will offer to pause cover or make a note that a late payment will be made.

Keep the wheels turning

Policyholders can mitigate the risk of an accident by ensuring their car is always in a roadworthy condition. One of the most common problems related to this is the condition of the tyres. Smooth tyres impact braking distance and affect a car’s road-holding ability. Overinflated tyres result in the tyre wearing in the centre, giving a harsher ride and reducing the tread life. An underinflated tyre, on the other hand, also reduces tread life significantly, with tyres wearing more on the outside shoulder. Underinflated tyres mean that the tyres flex more, causing internal heat leading to tyre damage from overheating or, worse, a blow-out. Policyholders should check the tyre pressure regularly.

Exercise due care

The policyholder has a responsibility to exercise due care. This means that they should always try and minimise or prevent a loss. This includes incidents such as leaving keys in the car or not activating the house alarm.

Maintain goods, maintain cover 

While insurers accept the risk for unforeseen events, the policyholder is expected to maintain their home and keep it in good condition. For example, regularly cleaning the gutters or checking that the roof tiles are clean and in good condition. If, for example, a heavy thunderstorm causes a portion of the roof to cave in with the buildup of pressure due to blocked gutters and lack of maintenance on the roof, an insurer can decline the claim because the policyholder failed to maintain their home properly.

Finally, a policyholder must read and understand their policy, both in terms of what is covered and what is excluded. While the insurance provider must explain the policy terms and conditions, the onus is on the policyholder to ensure that all the captured details are correct and to ask questions if they do not understand anything or are unsure of any details.

By Wilma van der Walt, Executive: Customer Experience and Operations at PPS Short-Term Insurance

PPS Short-Term Insurance Company Limited Reg. No. 2005/005531/06 is an insurer licensed to conduct non-life insurance business and an authorised FSP. Licence No.46274