Following a recent case in which an insurance claim was repudiated because it was not reported within the specified time, I was once again reminded of how important it is to read the general terms and conditions of your insurance policy. These are typically no longer than two pages and explain, in simple language, how your policy works — what is required and what should be avoided. Here are some key aspects to consider:
Premiums must always be paid in advance. If a premium is unpaid, there is technically no cover in place. In practice, insurers are often flexible and may still provide cover for the unpaid term. However, if premiums remain unpaid for two consecutive terms, the policy will be automatically cancelled. It is also highly unlikely that insurers will accept arrear premiums if a claim was submitted during the unpaid period.
The insured must take all reasonable steps to secure and maintain the insured property at all times, and to prevent or minimise loss or damage where possible. For example, quickly running into a shop while leaving your vehicle idling with the keys inside would be considered negligence. If the vehicle is stolen under such circumstances, the claim will most likely be declined. A policy may be cancelled by the insured at any time with immediate effect. Should the insurer wish to cancel the contract, they must give 30 days’ written notice.
The policy only grants rights to the policyholder, not to any other party. Any extension of the insurer’s liability to another person does not entitle that person to make a claim directly against the insurer. The insured must claim on their behalf, after which the insurer will handle the matter. No insured party may cede their rights under the policy.
When an incident occurs that may lead to a claim, the broker or insurer must be notified as soon as possible, including details of any other insurance policies covering the same event. The notification period is usually 30 days. Full details of the incident, along with clear copies of supporting documents, are typically required. Any incident involving theft, crime, or loss must be reported to the police immediately.
It is critical to remember that all rights to compensation under the policy are forfeited if a claim is in any way fraudulent, or if fraudulent means are used by or on behalf of the insured to gain a benefit. The same applies if a claim arises from deliberate damage caused by the insured or damage knowingly allowed by the insurer. All information related to claims must always be truthful.
For your own protection, it is essential that you read and understand the general terms and conditions of your policy — a few of which I have highlighted here.