Home Insurance Claims
The primary cause for home insurance complaints during 2020 was the rejection of claims. When you need to claim, you need to do it quickly and easily. It can be soul-destroying, having to deal with a mishap at your home and not getting the money you think you’re covered for to repair it.
Homeowners’ insurance disputes
According to the Ombudsman for Short Term Insurance (OSTI), complaints about rejected claims increased by 17% in 2020 “and continues to be the main basis for consumer dissatisfaction in homeowners’ insurance coverage”.
And the key reasons Home Insurance claims are being rejected?
“Policy exclusions for damage caused by defective design, construction or workmanship, wear and tear, as well as a lack of building maintenance are the common cause,” states the OSTI.
According to Rowland Ramalingam, Head of Non-Motor Claims at Santam Insurance, this points to a knowledge gap when it comes to taking out building insurance, stating that consumers need to protect themselves by being informed.
In 2020 Santam paid out in excess of R1.5bn in property claims. Ramalingam notes this figure was down by about R30m compared to 2019.
“There was a bigger volume of claims, but lesser quantum claims,” he says pointing to the stay-at home impact of Covid-19 as a key influencer. While there was a higher frequency of claims, the extent of damages appeared to be lower, possibly due to people being at home and being able to spot an issue faster.
“There was a big increase in geyser claims, storm claims and power surges. Burglary claims decreased in 2020. This is also likely due to more people being at home,” says Ramalingam.
Santam data for 2020 shows the most common claims included:
- Water tank, apparatus and pipes (mostly geyser claims)
- Special perils (defined as storm type or hail claims)
- Accidental Loss (accidental damage to fixtures and fittings eg stove tops)
- Lightning or Thunderbolt damage (decrease in 2020)
- Power surges (30% increase on claims)
- Theft and Burglary (decreased in 2020)
- Fire damage
Make sure you have sufficient cover
When it comes to claims being rejected, you should know the possible risks from the start when buying a property, advises Ramalingam.
In its 2020 report, the OSTI also cautions against relying blindly on the building insurance policy offered by banks with your home loan.
“The purpose of this evaluation is to establish whether the property is of sufficient value to act as security for the loan. The evaluator does not inspect the property for insurance purposes.
“As such, the assessment does not warrant that the property is free from underlying structural defects, wear and tear or other maintenance-related issues that may affect the outcome of a future claim. “
Do a proper risk assessment
Just because the bank insures your property, does not mean you’re covered for all eventualities, warns Ramalingam.
“Buildings have to be built according to compliance of local regulations. Make sure you have a property and maintenance expert give you an indication of what needs to be fixed before you decide to buy a property.”
Maintain your property
Ramalingam stresses the need to take care of your property regularly. Rejected property claims, submitted as covered damage are often due to lack of maintenance.
“Claims expected to be approved as an insured event won’t be paid if it’s due to wear and tear or gradual deterioration.”
“A policy usually covers a sudden incident. You don’t plan for storm to happen. If the claim is due to a maintenance issue, like broken roof tiles the entire claim won’t be paid out. An example is if there is a storm and due to broken tiles, your ceiling and carpets are damaged, Santam will pay for the resultant damages and not the roof tiles. The Santam policy covers resultant damage, which some insurers don’t do and therefore would reject the entire claim in this example provided.”
“Getting a reputable company to do your repairs is also very important. Have the foresight to prevent further issues for yourself down the road.”
4. Claim via your friendly broker
If you are accustomed to working through a broker, then go ahead and use that option to process your claim. Santam intermediaries are trained to provide our clients with expert advice – including during the claims process to ensure that you compile and send us the correct information. Use this online directory to locate a trusted broker in your area.