Insurance policy wording can be hard to make sense of for an ordinary person with no legal or insurance background.
An insurance policy wording creates a legally binding contract between the insurer and the insured. These contracts are quite extensive being full of technical terms and conditions. To complicate matters further for community schemes, the insurance contract is between the insurer and the community scheme as insured which typically leads to the individual member being unfamiliar with the terms and conditions.
“Can I claim for this?”
This is one of the most common questions we receive in the insurance industry. There is a general defining statement that may be applied to most potential claims which will provide excellent guidelines as to whether the insured has a viable claim.
If the loss or damage is an incident of sudden and unforeseen physical damage to insured property, as caused by an identifiable cause at an identifiable time and not otherwise excluded under the policy terms and conditions, it will likely constitute a valid claim.
Loss or damage: There must be an actual financial cost and/or actual tangible damage to property.
An incident: The loss or damage must be from a single, uninterrupted occurrence. Each separate occurrence will be viewed independently in respect of an insurance claim.
Sudden and unforeseen: Loss or damage must be unexpected. If we can foresee something, we can prevent it or, at the very least, take precautionary measures to minimise its impact. If we fail or neglect to do so, we would be in breach of the terms of the insurance contract and the insurer would be under no obligation to compensate the insured for their neglect.
Physical damage: Damage must include physical harm that impairs the value, usefulness or normal functioning of the property, resulting in a financial cost to the insured.
Insured property: The definition of buildings is quite broad but some things are not automatically included. Additional improvements or fixtures may not be included unless a specific request is made, for example, second geysers in a section or a thatch lapa in a garden.
Identifiable cause: Insurance does not cover everything. The original cause of the damage must be identified to determine whether it is included or excluded in terms of cover provided. The cause of damage must also be dealt with before resultant damage; failing which, the cause may reoccur or continue, becoming a foreseeable occurrence which will cause further (expected) damage.
Identifiable time: Where a specific date or time cannot be identified, it may be that the cause is an ongoing occurrence, e.g., an unseen water leak, and not sudden and unforeseen. Most insurers also have terms relating to late notification of an incident. This could lead to an increased value of damage due to the delay which may prejudice the insurer in terms of the value of compensation necessary.
Not excluded: The insurer is approached to carry the risk and provide indemnification. There are some risks that insurers will never carry and some they may not. It is important to know which of your risks they will and won’t accept.
Policy terms and conditions may be confusing at times and while it is important to familiarise yourself with the terms and conditions of the contract you have entered into. We recommend you contact your broker or insurer for assistance where uncertainty may be encountered.
Author: Bruce Gibson
Addsure is South Africa’s leading sectional title insurance brokerage. Obtain fit and proper advice from advisors who understand sectional title. Contact our head office, Cape Town (021) 551 5069 who will put you directly in touch with one of our nationwide advisors.