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How to deal with a rejected insurance claim

In our previous blog, we discussed the three Ombud Services that affect community scheme insurance and the basic differences between their services.

Let’s say, as an owner you have water ingress and submit an insurance claim on the basis of a damaged pipe.

The insurer assesses your claim and advises that they reject the claim on the basis that the damage occurred over an extended period of time and that – according to the plumber – the cause is corrosion or pitted pipes.

You disagree on the basis of the fact that you believe it is unfair for the insurer to expect maintenance to a pipe in wall that you can’t even see.

How should you approach this?

The first step is to ask the insurance advisor to carefully explain the position and to ask the advisor’s advice on whether the insurer made the correct decision, i.e. did the insurer act in all fairness?

If the owner disagrees with the advice, they can approach the trustees with a request to submit a complaint to the Ombud for Short Term Insurance (OSTI). The trustees may decline on the basis that they agree with the outcome and that they effectively decline the owner’s request. It’s important to note that the owner cannot complain to OSTI directly as the owner is contractually only a co-insured. In terms of the STSM Act the body corporate is the insured and the trustees oversee all matters in this regard. A complaint need the signature of two trustees and the managing agent. Strictly speaking, it should also be supported by a trustees’ resolution agreeing to the complaint.

Treating Customers Fairly

We suggest that the owner is given the opportunity to complete the complaint form that sets out their complaint. This must be signed by the trustees with a caveat that the trustees agree with insurer’s decision but that they respect the owner’s rights and interest, thus allowing the complaint to be heard by OSTI.

This approach ensures that even if the owner is wrong, the right to the fullest recourse and remedy is always available and that all complaints can be expressed and will be fairly considered.

TCF (Treating Customers Fairly) is a culture that the FSB (Financial Services Board) is pressing financial services providers to implement and live by. This approach ensures fair treatment for anyone that enters a financial agreement.

Note: The fact that the owner cannot see leaking or corroded pipes in a wall does not mean the claim will be accepted. Leaking corroded pipes over time are excluded by almost all insurance policies.


Author:  Mike Addison, Addsure

Contact Addsure – The Leaders in Sectional Title Insurance – for fit and proper advice from advisors who understand Sectional Title. Contact us in Johannesburg (011) 704-3858; Durban (031) 459-1795; Cape Town (021) 551-5069