KNYSNA PROPERTY NEWS - For countless numbers of people who had insurance for their homes and belongings, how to go about claiming is explained here.
For those who did not have insurance your options are spelled out here.
Insurance is a legal contract in terms of which a person (“the insured”) pays money ("a premium”) to a company (“the insurer”) in turn for which the insurer undertakes to reimburse the insured person for loss or damage.
There are various forms of insurance and this article focuses on homeowner’s insurance. The two primary categories are household content and building insurance.
Household content: This insurance covers damages to or loss of any movable property inside your house, or on the property itself (such as garden furniture or tools) – in essence, everything you could pick up and remove from the property.
The nature of the items covered by an insurance agreement, and the values for which items are insured, will depend on the specific terms and conditions of each policy.
The claims process
Although every insurer has its own specific policies and procedures there are common features that apply to all.
The first step is to notify your insurer of a claim or potential claim. You can do this through your financial adviser or broker (the person who put the policy in place) or directly to the insurance company itself.
It is important to notify your insurer of any potential claim as soon as you are able to, as some policies set strict time limits within which to do so, failing which there might be grounds on which to refuse your claim (this is referred to as “repudiation”).
Once your claim is registered, the insurer will allocate the claim to one of their assessors. These are persons specifically trained to assess the extent of the loss and they will typically schedule to meet with you to view the damages.
The insurance assessor will then secure quotations for the costs of repair and/or replacement of damaged items, and you may do so too.
What if you disagree with the settlement?
If you are not satisfied with the settlement offered by your insurer (for example, you disagree with the amount or the contractor), you typically, depending on the specific terms of your insurance agreement, must first make written representations to your insurer setting out what you disagree with and the reasons why.
It is very important to do this without delay as again there are strict time periods within which to make the representations (typically 30 days) to the insurer.
If you remain unsatisfied with the insurer’s position after your representations then you may approach the ombudsman for short-term insurance. All of their details and information on lodging a complaint can be found on www.osti.co.za.
Repudiation of your claim
Your insurer may also repudiate your claim in its entirety and refuse to compensate you at all. This is referred to repudiation.
Although there are various grounds upon which an insurer may repudiate a claim, the most common found in practice is due to the alleged dishonesty of the insured. This typically relates to inaccurate or incomplete information given by the insured person to their broker or the insurer when the policy was first put in place.
It is vitally important that you are always honest in all your communications, verbal or written, with your broker or insurer. This remains true at any stage of the process, whether you are taking out a policy or dealing with a particular claim.
Exaggerating the extent of your loss, or inflating the real or actual costs of repairs or replacement, is fraud, a serious criminal offence. You may be criminally charged and the insurer may also take civil legal action against you to recover monies paid by them.
It is important to know that insurance companies share information among one another on all insurance claims. This is done with your consent (appropriate clauses will be found in your insurance policy agreement) and is for your protection to combat insurance fraud.
What if I do not have insurance?
If you do not have insurance at all you will carry the full extent of any damage or loss.
It also often happens that people may have insurance but the amount for which they are insured is far less than the total amount of actual loss they have suffered (referred to as being “underinsured”).
If you do not have insurance and have lost your home entirely, plus you still have a bond, you remain liable to the bondholder (the relevant bank). The complete or partial loss of your home is not a legal ground to avoid liability to the bank.
In this circumstance your only likely legal remedy is to sequestrate your estate. Sequestration is the legal term used in South Africa and is more commonly referred to as “declaring bankruptcy”. For companies or close corporations the term used is “liquidation”, but it is essentially the same legal process.
Sequestration essentially liquidates (sells) the remainder of all your assets and the proceeds are then distributed to your creditors pro rata. The full remainder of your liabilities (all debts to any creditor) are then extinguished in full so you do not have to repay those creditors. You will, however, have a curator appointed to manage your financial affairs and this will remain in place for two to four years until you can approach a court to be rehabilitated.
It is important to approach a suitably experienced attorney for advice and assistance on any insurance claim dispute or if you need detailed advice on the sequestration process.
Donald Curtis
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