South African society has become much more knowledgeable and aware of its constitutional rights, and as a result has become a more litigious society.
“From an insurance perspective, liability — be it personal or general liability — means that the person involved must be legally liable, which can only be decided by a court of law,” explains Jono Soames, general manager: personal at Mutual & Federal.
Legal liability is determined in terms of accidental death; bodily injury or illness; or accidental loss of or damage to property, which occurs during the period of insurance. Liability may also come about as a result of negligence, which then causes a loss, accident, injury or death.
Although most insurance companies will only pay out based on the findings of a court, they do have their own in-house legal experts who can advise on the liability of the insured before the matter even goes to court. However, it is important to understand that the court’s ruling in terms of any monetary payout is not necessarily fully binding on the insurance company.
For example: should the court find that the insured is legally liable and order him or her to pay R5-million in compensation, the insurer will only pay out in terms of the insured’s policy. If the policy covers the insured for R2,5-million, the insurer will only be liable to pay R2,5-million and not the full R5-million.
“So, therefore, as with all insurance, it is important to read your policy beforehand and understand the liability cover you enjoy as well as the limitations,” says Soames.
Householder’s liability covers the insured or so-called householder for liability arising due to injury or loss inside the home, while tenant’s liability covers the person renting the premises for damages that may arise out of an insured event linked to the household goods section.
“Property owner’s liability protects the owner of the property, whether living there or not, against any defects in the property that may cause damage or injury. Property owner’s liability is more of a maintenance issue and comes into play in instances where the property owner has not taken proper precautions,” says Soames.
Some policies can even be extended to cover liability issues such as wrongful arrest, which may arise out of a local block-watch scenario where the wrong person is accidentally arrested.
Then there is also general personal liability, which covers you when you are away from your premises and cause an accident or loss. For example, you may be crossing a road illegally and in so doing cause an accident for which you may be held liable.
“With most insurance companies you can extend the limit of your liability depending on your own personal requirements,” says Soames.
You can even ask for extra cover to be included such as cover when driving in a foreign country. Most insurance companies do, however, include general liability as part of household insurance, but it is important to always first check the type and extent of cover before deciding whether you need or want more.
If unsure, seek advice from your financial adviser or intermediary. “You don’t want to be left in the lurch saying, ‘I didn’t know.’ Knowing and understanding your policy as well as the cover you enjoy is your responsibility.”