With the effects of the Covid-19 pandemic and the national lockdown being felt far and wide, 2020 has been a year characterised by financial hardship for many. But while many consumers are finding ways to cut back on so-called ‘luxury costs’ in light of the country’s current economic fragility, insurance should not be considered one of them.
In fact, during tough times, insurance is quite simply something we cannot afford not to have, offering a level of financial security designed to mitigate the impact of unforeseen events, thus reducing any further threats to already strained bank accounts.
What many consumers don’t know however, is that any insurance policy is a two-way agreement between the policyholder and the provider, one that requires a level of transparency between parties if it is to remain valid.
It is important to bear in mind some of the key factors that could result in a claim being denied, or, in a worst-case scenario, in a policy being voided or cancelled. Here are some of key pointers to bear in mind to ensure your cover is not compromised:
Non-payment essentially constitutes a breach of contract if not paid within the period of grace and this may lead to a claim being rejected.
Lack of disclosure or altered risk behaviour is another reason that may result in the rejection of a claim. For instance, you choose to upgrade your car and pass on your existing one to your child, only to have it involved in an accident. In circumstances where the incorrect person was noted as the regular driver, claims are often rejected, given the fact that the person behind the wheel is not noted as the car’s ‘regular driver’. As such, it is vital that you keep your insurer up to date with any risk altering life changes, as these could have a significant impact on the claims process at a later stage.
Claims can also be rejected based on a lack of adherence to the terms of the contract with your insurer. For instance, certain policies require specific types of vehicle trackers to be installed – given that different models are designed to track different varying elements like impact or speed. Avoid cutting corners – it could cost you dearly in future.
Cancellation vs. Voidance – what’s the difference?
Policy cancellations are not something that insurers take lightly, but at times drastic action is necessary. After all, any type of agreement must be beneficial for all parties concerned. Cancellation of a policy is something that happens rarely and is typically the result of a falsified claim – for example someone who deliberately stages a hijacking or robbery so as to claim an insurance pay-out. In serious cases such as this, the policy may be cancelled due to breach of trust, something that can have a serious impact on any future insurance policies, as it constitutes part of one’s permanent record.
In less drastic cases – for instance when claims are made either due to recklessness or lack of disclosure regarding previous losses, cancellations or certain risk altering circumstances – a contract might be voided. In this case, the policy would simply cease to exist and the insurer would refund premiums paid. In such instances, one’s insurance profile would be adversely impacted.
Refuting a decision
If you’ve had your policy cancelled or claim rejected and feel that the decision on the part of the insurer was unfair, there are various avenues you can explore to dispute the outcome. Remember that insurers have a vested interest in treating clients fairly, and as such, your first port of call should be the insurer’s own dispute resolution team. Should the matter remain unresolved, you should then approach the Ombud for Short-term Insurance, who will offer an objective and specialised assessment of your case and provide adequate resolution if merited.
Remember, an insurance policy is a contract between two parties, one which requires full disclosure and adherence to its terms. As such, it is vital that you understand what is expected of you as the policyholder and ensure that your insurer is kept informed should your risk profile change in any way.
Karabo Kopeka is head of claims at MiWay Insurance