You can take out insurance in the event that you die, become disabled and can get cover for the loss or damage to property or an item, such as a car. Many people go about their business assuming that once premiums are paid they are guaranteed a pay-out should something go wrong. But this is not always the case and there are many reasons why your claim could be rejected by an insurer.
Here are 15 of the common reasons why insurance claims can be rejected.
1. If it is found that you were deliberately negligent or if you are at fault then your claim could be rejected:If the insurance company believes that you are at fault, it will not pay out an insurance claim. For example, if you are involved in an accident and it is found that you didn’t maintain your tyres and the accident was as a result of this then the insurer won’t pay out the claim.
2. Over valuation of the item:If your car, or any other item that is insured, is viewed to be worth less than what it was insured for or what you claimed it was worth, you claim will most likely be rejected. It is important to make sure that you and your insurance company agree on the value of all items before the need to lodge a claim arises.
3. You don’t pay your insurance premiums, or pay them late: If you have missed any of your premiums, or pay them after the due date, your insurance company will have grounds for rejecting a claim.
4. A non-listed driver was involved in the accident:If there is an accident, but the person driving the car at the time is not listed as one of the drivers on the insurance policy, the claim can be rejected.
5. An unlicensed driver was involved in the incident: If someone without a valid driver’s licence has an accident in your car then your claim is likely to be rejected.
6. The car is not listed on the policy:If the car that is involved in an accident is not the one that is listed on your insurance policy, the claim will be rejected. It is important to make sure that all information pertaining to the car and drivers is up-to-date.
7. Non-disclosure of information:If you have failed to provide your insurance company with all relevant information, prior to or after an incident, your claim will be rejected. This includes any previous accidents you may have had, how long you have had your driver’s licence, where your car will be parked at night and during the day (such as in a secured area or on the street), any false information that you provide may be grounds for the insurance claim to be rejected.
Insurers can reject life and disability cover claims too. Liberty recently highlighted an example in its 2014 claim statistics report that policy holder *Carol Sharp had her claim rejected when she was diagnosed for multiple sclerosis as she hadn’t disclosed her depression. She was informed that a depression exclusion would have been applied to her policy from inception had she disclosed her medical history. She was requested to accept the exclusion to keep the policy active and to qualify for the R150, 000 pay out she eventually received.
8. Reckless driving:Carinfo.co.za explained: “Some car insurance companies will include a statement called a “failure to take care” clause. This means that if the company can prove that you were driving recklessly (you missed a road sign, for example, or were driving too fast for conditions) then they don’t have to pay out on your claim.”
9. Drunk driving:If you have an accident while drunk, the insurance company will not pay out a claim. Drunk driving is classified as anything over the legal limit (as well as failing a breathalyser). The legal limit is a breath alcohol content of 0.24mg per 1,000ml according to the AA.
Simply put this equates to a maximum of one unit of alcohol per hour, which constitutes 10ml of pure alcohol based on an adult weighing 68kg in South Africa. New regulations could be introduced soon which will make it illegal to drive with any amount of alcohol in your system. For more information, click here.
10. You are out of coverage:Some insurance companies will cover a total amount per year. That means that if you have an accident in the beginning of the year and claim, and have a subsequent accident, your insurance company might not pay out if you have used all of your coverage with the first claim.
11. Personal vs. business use:If your car is insured under personal use, but you actually use your car for business purposes, the insurance company will reject your claim as you were not truthful when taking out the policy. Insurance companies make a point of asking if vehicles are for personal or business use, as the type of insurance will differ depending on the use of the vehicle.
12. Late notification of a claim:According to AON Insurance, another reason that insurance companies may reject a claim is if you notify them of the incident outside of the specified timeframe listed in the insurance policy.
13. You don’t comply with the security arrangements:When you take out an insurance policy on a car, or even a house, there are certain terms in the policy that list what security precautions should be taken. For example, having an immobiliser or alarm fitted. If these items are not fitted, or are fitted but not used, an insurance claim may be rejected.
14. Know your policy:It is important to know what type of insurance policy you have, as a ‘Total Loss Policy’ will only pay out in the event that the car is completely written off. If your car is damaged but still drivable, this type of policy will not pay out anything.
15. Not reading the exclusion causes properly:When you take out insurance it is vital that you are aware of what is and is not covered by the policy. Otherwise you could make a claim for something that has not been included in the policy.
These are some of the reasons why an insurance company could reject a claim. To minimise your risk of having a claim rejected, ensure that you know exactly what is covered in the insurance policy, and that your insurance company has all relevant information.
If any details change, for example an additional person will be driving the car, or your address has changed, inform your insurance company immediately to help avoid having a claim rejected in the event of an incident.
If you lodge a claim properly and still get rejected you can always lodge a complaint with the Ombudsman for Short Term Insurance. Click here to find out more about the procedure: http://www.osti.co.za/steps-to-lodge-complaint.html.
*Sources:
http://carinfo.co.za/top-10-reasons-car-insurance-companies-deny-insurance-claims/
http://www.insurancejunction.co.za/car-insurance/guide/dealing-with-a-rejected-claim.asp