Top 5 Reasons Insurance Claims May Not Be Paid Out

Story Highlights
  • #1 - The insurance policy is not specific enough
  • #2 - Deterioration of belongings
  • #3 - Failing to consider property maintenance and additions
  • #4 - Lack of proof of ownership
  • #5 - Non-compliance with security

More South Africans than ever before now have some sort of short-term insurance in place and this figure is only increasing.

Whilst the citizens of the country are becoming more and more protective over their belongings, insurance companies are experiencing a rise in claims from their clients. This, however, does not mean that all claims are necessarily being paid out.

The reason for the lack of settlement or pay-out of claims can be attributed to various reasons and it is difficult to determine a single factor.

There are some common factors involved and might just give you clarity on insurance situations:

#1 – The insurance policy is not specific enough

It often happens that when insurance is taken out, some items are not always covered due to the specific plan that is chosen.

Under-insurance is a huge issue when it comes to buildings and businesses.

Claims will only be considered based on the percentage that you insured it for. If you buy something after your policy has been finalized, then you could run into a few problems when you decide to claim on them.

Ensure that you include any new items onto your insurance policy.

#2 – Deterioration of belongings

All things deteriorate some time or another, whether it is a house, a car, or a bathtub. Age takes its toll on everything. When these items reach the point where they are no longer usable, insurance policies almost never cover them.

From a financial sense, it is not logical to replace something that has naturally run its course. If, however, the items have suffered unforeseen damages and if it was sudden, then insurance companies might consider covering it.

This may not be the full amount of the item, so be sure to check your policy before you sign.

#3 – Failing to consider property maintenance and additions

One of the trickiest types of insurance to successfully claim from, is home and building insurance.

If proper maintenance is not successfully carried out on the property then the chances are big that you won’t be able to claim due to negligence.

Home improvements might not be included either, especially if you add them after you have taken out the policy. Adding green features like solar panels or generators have to be specified as part of the cover once you install it on your property.

#4 – Lack of proof of ownership

Insurers are also very careful to cover an item if there is no proof of ownership on the item. They need to know that the item belongs to the homeowner that took out the insurance policy from the beginning.

It would be a good idea to list all the items that you have put on your insurance policy so that you can refer back to it when you submit a claim.

Serial numbers on electronic equipment should also be jotted down in order to prove that the serial numbers on the insurance company’s system, matches yours.

#5 – Non-compliance with security

Burglary claims are usually rejected if you don’t follow the security requirements set out in your policy.

An alarm policy, for example, may include that an alarm must be installed, the system must be linked to a 24-hour reaction unit, it must be maintained and in good working order at all times, it must be activated when the home is unoccupied even if it is for short periods of time, and the system may not be removed without the insurer being informed.

Ensure that all your claims are successful by updating your insurance policy as you add new items on to your home.

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