Fair­ness can trump pol­icy con­di­tions

The Om­buds­man for Short-term In­sur­ance may look beyond the strict word­ing of your in­sur­ance pol­icy when de­cid­ing whether your in­surer has dealt fairly with your claim. reports

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There are two sides to ev­ery story, and in dis­putes be­tween con­sumers and their in­sur­ers when in­sur­ance claims are re­jected, the Om­buds­man for Short-term In­sur­ance, Deanne Wood, must care­fully weigh the mer­its of each party’s ar­gu­ment be­fore mak­ing a rul­ing. Some­times the om­buds­man looks beyond the strict le­gal definitions and con­di­tions of a con­tract and makes a de­ci­sion based on equity and fair­ness.

Be­low are three case stud­ies from the om­buds­man’s most re­cent quar­terly news­let­ter, The Om­buds­man’s Brief­case. Two de­ci­sions went the way of the pol­i­cy­holder, and one the way of the in­sur­ance com­pany.


Be­fore you take out a pol­icy, your in­surer must make sure that all con­di­tions that may ad­versely af­fect you are made clear to you and that you un­der­stand their im­pli­ca­tions. This is a re­quire­ment of the Pol­i­cy­holder Pro­tec­tion Rules, by which all in­sur­ers must abide.

In the case of Mr H, in­sur­ance com­pany Cen­triq re­jected his claim for dam­age to a motorcycle, be­cause the per­son rid­ing it – Mr H’s son – was not a named rider on the pol­icy.

In his com­plaint to the om­buds­man, Mr H said he had clearly told his (in­de­pen­dent) bro­ker that he had bought the bike for his son to use to travel to school. He also pointed out that the pol­icy sched­ule con­tained ad­di­tional ex­cesses that were ap­pli­ca­ble to rid­ers un­der the age of 25, and these should not have been in­cluded on the sched­ule if the in­surer did not in­tend to cover peo­ple other than the named rider.

Mr H said he was pre­pared to pay the ad­di­tional ex­cess for his son, who was un­der the age of 25.

In its re­sponse to the com­plaint, Cen­triq said it had not re­ceived any com­mu­ni­ca­tion from the bro­ker stat­ing that it was Mr H’s son who would be rid­ing the motorcycle, and per­sisted in re­ject­ing the claim. The in­surer sug­gested that the com­plaint be di­rected to the fi­nan­cial ad­vice om­bud for in­ves­ti­ga­tion into the con­duct of the bro­ker.

The om­buds­man asked Cen­triq to pro­vide a copy of the proposal form or a record­ing of the un­der­writ­ing con­ver­sa­tion as proof that it had re­quired Mr H to dis­close the de­tails of the named rid­ers. The in­surer also had to show that Mr H had been in­formed that there would be no cover for rid­ers not named on the pol­icy.

The om­buds­man found that the proposal form did not cre­ate an obli­ga­tion on Mr H to dis­close the de­tails of the named rid­ers on the pol­icy. Fur­ther­more, there was no record­ing of an un­der­writ­ing con­ver­sa­tion, be­cause the risk was ac­cepted on the ba­sis of the in­for­ma­tion on the proposal form alone.

The om­buds­man rec­om­mended that the claim be paid, be­cause Cen­triq had failed to com­ply with the Pol­i­cy­holder Pro­tec­tion Rules, in par­tic­u­lar the rule that re­quires an in­surer to pro­vide you, be­fore en­ter­ing into a con­tract, with the “con­cise de­tails of any spe­cial terms and con­di­tions, ex­clu­sions, wait­ing pe­ri­ods, load­ings, penal­ties, ex­cesses, re­stric­tions or cir­cum­stances in which ben­e­fits will not be pro­vided”.

Cen­triq agreed to set­tle the claim with a de­duc­tion of the ad­di­tional ex­cess for the rider be­ing un­der the age of 25. Mr H ac­cepted the set­tle­ment.


You can’t claim for things that are not cov­ered in your pol­icy. Mrs C found this out when she claimed on a travel in­sur­ance pol­icy is­sued by San­tam.

Ac­cord­ing to the om­buds­man’s re­port, Mrs C took out cover for her over­seas hol­i­day, from Novem­ber 20 to 28, 2015. Dur­ing her hol­i­day, Mrs C fell ill and, as a re­sult, was un­able to at­tend a num­ber of planned ac­tiv­i­ties for which she had paid in ad­vance. Due to a lack of avail­able flights, she was un­able to fly home ear­lier than planned. She there­fore stayed on for the full du­ra­tion of the trip, re­turn­ing on her sched­uled flight on Novem­ber 28, 2015.

On her re­turn, Mrs C submitted a claim, un­der the “cur­tail­ment of jour­ney” clause in the pol­icy, to be re­im­bursed for the costs as­so­ci­ated with the hol­i­day ac­tiv­i­ties she had missed.

San­tam de­clined the claim. It ar­gued that cover un­der this clause is pro­vided only if the jour­ney is cur­tailed, in which case the in­surer would pay for the non-re­fund­able por­tion of travel or ac­com­mo­da­tion ar­range­ments paid for by the pol­i­cy­holder.

It said the pol­icy did not make pro­vi­sion for unat­tended hol­i­day ac­tiv­i­ties. The in­surer added that Mrs C’s ac­com­mo­da­tion was utilised for the full pe­riod of the book­ing.

The om­buds­man con­sid­ered the mean­ing of the word “cur­tail­ment”. She told the par­ties that the first step in in­ter­pret­ing a con­tract is to de­ter­mine the or­di­nary gram­mat­i­cal mean­ing of the words used. In con­sid­er­ing the con­text in which San­tam used the word “cur­tail”, the om­buds­man con­cluded that its or­di­nary gram­mat­i­cal mean­ing was to “cut short”.

The om­buds­man ad­vised Mrs C that her hol­i­day had not been cut short and San­tam had cor­rectly in­ter­preted its pol­icy terms and con­di­tions. She up­held the re­jec­tion of the claim.


Your in­surer needs to take your ver­sion of events into ac­count when as­sess­ing a claim and can­not, with­out proof to the con­trary, dis­miss your ver­sion as de­void of truth.

Ms A was in­volved in a mo­tor ve­hi­cle ac­ci­dent that in­volved a third party in Septem­ber 2010. The third party in­sti­tuted le­gal ac­tion against Ms A in 2012. A sum­mons was is­sued and, fol­low­ing Ms A’s fail­ure to de­fend the mat­ter, a de­fault judg­ment was granted against her. A war­rant of ex­e­cu­tion was is­sued and a no­tice of at­tach­ment was served on Ms A in Oc­to­ber 2014.

Ac­cord­ing to Ms A, she never re­ceived the sum­mons to ap­pear in court and be­came aware that there was a case against her only in Oc­to­ber 2014, when the no­tice of at­tach­ment was served. Im­me­di­ately on re­ceipt of the no­tice, she in­formed her in­surer.

Saxum In­sur­ance re­jected li­a­bil­ity for the third-party claim on the ba­sis of late no­ti­fi­ca­tion of the claim by Ms A.

The in­surer submitted that its rights had been se­verely prej­u­diced by the late no­ti­fi­ca­tion, be­cause a de­fault judg­ment had al­ready been granted and Ms A’s prop­erty had al­ready been at­tached.

The in­surer re­ferred to the pol­icy word­ing, which states that, “if you be­come aware of any pos­si­ble pros­e­cu­tion or le­gal pro­ceed­ing or claim against you, you must im­me­di­ately in­form the in­surer in writ­ing”.

The om­buds­man told Saxum that there was noth­ing to sug­gest that Ms A was be­ing un­truth­ful when she said she had never re­ceived the sum­mons. Her ver­sion was rea­son­ably con­ceiv­able.

Also, af­ter read­ing the rel­e­vant sec­tion of the pol­icy word­ing and the in­for­ma­tion pro­vided, the om­buds­man was of the view that there had been no real prej­u­dice suf­fered by the in­surer. This was be­cause Ms A had submitted a valid claim in terms of which she was en­ti­tled to pro­tec­tion against a third-party ac­tion. She had in­formed the in­surer im­me­di­ately on be­com­ing aware of the le­gal pro­ceed­ings in­sti­tuted against her.

The om­buds­man rec­om­mended that the in­surer set­tle the claim by pay­ing Ms A’s prin­ci­pal debt.

Saxum agreed and made an of­fer to Ms A on this ba­sis, which she ac­cepted. • Note that each case is dealt with on its own mer­its and no prece­dents are cre­ated by the find­ings. The case stud­ies pro­vide guid­ance and in­sight into how the om­buds­man’s of­fice deals with com­plaints. Also note that the events de­picted in the illustration above do not nec­es­sar­ily re­flect the facts of the travel in­sur­ance case. • Con­tact the of­fice of Deanne Wood, the Om­buds­man for Short-term In­sur­ance, on 0860 726 890 or 011 726 8900, or email info@osti.co.za

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