Most insurance-related complaints arise as a result of policyholders not being informed or having the time to read the fine print on their policies. A good broker will keep you in the know, but it is always commendable to have an understanding of potential pitfalls.
Steffen Gilbert, chief executive at Santam, South Africa’s largest short-term insurer, says 5% of complaints relate to only a portion of a claim being paid, rather than the full amount. This is inevitably due to policyholders having insufficient cover.
“In warranty policies for vehicles, where insurers limit cover for major parts to R10 000, the replacement cost of a luxury car engine, for example, will exceed what the policy provides. In such cases the policyholder will need to pay the difference, over and above the R10 000.
“If you use a broker, you will be advised regarding exactly what you are paying for and the limitations of your policy.
“Often policyholders will decide against ‘all risks’ cover for personal effects and other valuable items like jewelry. Then, when their cellphone is stolen in a smash and grab, they are surprised when their insurer doesn’t pay out. This kind of cover would need to be specified in an ‘all risks’ policy, which many policyholders don’t know.”
Gilbert continues that if under a motor policy one is required to have theft-preventative devices in place, such as satellite tracking or gear locks, these need to be approved by the Vehicle Security Association of South Africa approved — meaning they are regulated and endorsed by the South African Insurance Association.
“Many policyholders do not know that if their vehicle is stolen with, for instance, a non-Vesa-approved gear lock in place, it is doubtful that an insurer will pay out in full. One percent of our complaints are from claimants who have unfortunately not used Vesa-approved security measures.
Huge increases in home values over the last few years mean that a property worth R100 000 10 years ago can nowadays easily be valued at R1-million. “Household cover is linked to the value of a policyholder’s home; thus, should their home burn down without having a updated policy in place, R100 000 is all that will be received in claims,” he says,
“And, should the loss not be total — for instance, should the roof blow off and the damage total R30 000 — just R3 000 will be paid out, as there are only insurance provisions for 10% of the true value of the home.
A good broker will highlight these factors and constantly remind clients to update policies.
“A lack of security gates and burglar bars or dysfunctional security systems is yet another factor that leads to claims not being paid out, accounting for 3% of the complaints we receive,” says Gilbert.
“If a client lives on the ground floor of an apartment block, he or she needs to install burglar bars on all external, ‘openable’ windows. Also all external doors, including sliding doors, need security gates in place. Second-floor apartments with balconies may also need security gates and bars, but this will depend on how easily the balcony can be accessed.
“As with a motor policy, household-cover requirements will depend on the area in which a policyholder lives, as well as security measures in place. If you live in a security block, the tightness of security needs to be assessed by your broker.”