Onus lies with you to provide correct information

YOU MUST provide accurate information when taking out an insurance policy or submitting a claim.

The Office of the Ombudsman for Short-term Insurance receives many complaints where policyholders intentionally provided incorrect information when they bought the policy in the hope they would pay a cheaper premium.

The office says it is your responsibility to provide the insurer with all the information it requires to underwrite your risk correctly.

The office says the information provided at sales stage by the applicant enables the insurer accurately to determine whether or not to cover the applicant, what premium to charge, and whether the policy should be endorsed with special conditions.

The Policyholder Protection Rules require the insurer to design its sales questionnaire so that it can draw out the answers required to underwrite the risk.

The insurer is also required to explain the purpose of the questions, and that a claim can be rejected if the applicant provided incorrect information.

“If incorrect information is provided unintentionally, your insurer may still pay out a claim (but is not obliged to). The office of the Ombudsman for Short-term Insurance sees far too many complaints where policyholders intentionally provided incorrect details at sales stage in the hope of paying a cheaper premium. We receive numerous complaints from consumers where their insurer has subsequently rejected a claim on the basis of a material misrepresentation or non-disclosure at sales stage,” says the ombudsman’s office.

The office says important information that policyholders sometimes neglect to disclose is having suffered a previous loss or being declined cover.

“If you misrepresent, or fail to disclose, material facts to the insurer, your policy may be cancelled with effect from the start date. In this event, you will be entitled to receive a refund of all premiums paid since the start date, but this is cold comfort when you are faced with a big claim, such as when your vehicle is a write-off or your home is burgled.

“Your duty to disclose does not end once the cover starts. You are required to inform your insurer of any material change to your circumstances prompting a claim submitted to the insurer for payment. The insurer needs to establish the facts surrounding the loss so as to determine its liability in terms of the policy.”

CLAIMS INVESTIGATED

The ombudsman’s office says most policies include a clause that entitles the insurer to reject the entire claim even if only one aspect of it is found to be dishonest, and insurers thoroughly investigate a claim, and at that stage any misrepresentation will invariably come to light.

“For instance, on a vehicle accident claim, it may perform an assessment interview with witnesses, including the third party, tow operators and the police. The insurer may also request medical reports, bank statements, vehicle-tracking reports, and cellphone beacons and billing to ascertain whether the policyholder complied with the terms and conditions of the insurance contract. Where a policyholder has had a policy cancelled for dishonesty, it will prove difficult for that person to find alternative cover in future.”

The office says fraudulent claims are a major challenge to the shortterm insurance industry, and insurers appoint investigators to validate highvalue or suspicious claims, to reduce the number of fraudulent claims.

“Although the burden of proving fraud is high and lies with the insurer, the implications are serious. A fraudulent claim may not only result in a claim being rejected, or the cancellation of a policy, but the matter may be reported to the police. Therefore, to have valid and ongoing cover, you need to pay close attention in your dealings with the insurer, so always provide true and complete information and make sure it remains up-to-date.” – Joseph Booysen