6 Common reasons home insurance claims get rejected

When our homes get damaged or burgled it’s often assumed that most insurance claims be approved and paid.

But not all claims are upheld, and many homeowners are left out of pocket after realising too late that the bill worth thousands of rands is one for them to cover.

Here’s six common reasons why claims are rejected and solutions you can follow to prevent yourself from becoming another repudiation statistic.

1. Your insured event is not covered

Some damage to a home may occur gradually over time. For example, mould doesn’t grow overnight, but flash flood could occur in a matter of minutes.

Solution: Familiarise yourself with your home contents and building insurance terms and conditions. Insurance policies will highlight what the company considers as damage and what it does not. Elizabeth Mountjoy, private wealth manager for FNB Insurance Brokers advises: ‘Make specific note of the risk events that are covered and what is excluded.  If you have any concerns or questions, speak to your insurer or broker for guidance and clarity on the cover that will best suit the specific needs.’

2. Wear and tear

If you don’t maintain your property, it’s likely any claims will not be covered. For example, if your roof requires waterproofing but there’s damage caused by a storm because of the roof leak your claim will be rejected.

Solution: ‘Ensure that basic upkeep such as the cleaning of gutters and checking your roof for any signs of damage is done regularly, especially before the rainy seasons approach,’ advises Mountjoy.

3. Underinsurance

You may not be paid out for the entire claim as your insurer may have covered you for a certain amount only.

Solution: Marius Neethling, personal lines underwriting manager at Santam, advises: ‘To avoid this, ensure that the insured value of your contents and buildings of your private residential structures are equal to the current replacement value, not the original purchase price.

‘We often find that goods stay insured for the original value – for example, a dining room set bought 10 years ago would be insured for R6 000. But to replace the dining room set could cost R20 000 today, so the claimant could be left very disappointed when they leave the shop with an inferior product to what they had.’

4. Not insuring against the right risk

Your insurance policy may only cover you for contents lost or stolen within the home. But as soon as the item is removed – either transported in the car or taken to work or your holiday home you could be at risk of not being covered.

Solution: ‘You need to supplement the cover with an all-risk addition to your policy. You should supply original purchase invoices or valuation certificates if applicable, to your insurance company, and preferably keep a copy as proof of ownership,’ says Neethling.

5. Not insured for personal liability

Personal liability is insurance that covers you against a third party suing you in your personal capacity for financial loss, physical injury, or death. Standard cover for personal liability is between R2 million and R5million. However, this may not always be enough.

Solution: ‘Most insurers offer top-up cover at a low additional premium– extending your cover to R10m or even R20m as in the case of Santam. As the chances of you claiming are very low, extended cover is highly affordable and probably well worth it,’ says Neethling.

6. Non-disclosure

If you haven’t been entirely truthful about your home, how it’s used and its contents you could be rejected come claim time. ‘If the policyholder is renting out the property or the property is being used for business purposes, the policyholder needs to disclose these facts. Otherwise, the insurer could argue that the policyholder withheld information that could have impacted the initial risk assessment of the property,’ says Bertus Visser, certified financial planner, PSG Insure Distribution.

Solution: Visser says: ‘Full, accurate and complete disclosure will ensure correct underwriting of the risk and ultimately result in a good claims experience.’