“I am an owner and my claim was rejected. What now?”
Nobody feels great when they receive a letter that contains the words: Claim Rejection.
Some people have a need to assign blame or to understand cause when things go wrong and there is often an assumption that some elements are automatically insured.
Trustees are obliged to cover certain events, usually as set out in prescribed rule 29.1(a). Most sectional title policies cover these defined events but there are always exclusions and conditions. For example: damage as a result of wear and tear, corroded pipes, resultant damage occurring over a period of time such as pin-holed pipes and damp, swollen cupboards from leak over time, are excluded from cover.
An insured peril is associated with an event such as bursting of a pipe, flood, fire and storm, i.e. an event which occurs suddenly, was unforeseen and at a time that was easily and clearly established.
Most policies, particularly perils-based policies, require the insured to prove their claim, i.e. to show proximate cause for it to be an insured event as defined in the policy wording. The newer all-risk polices are more specific about what is not insured.
The body corporate is the insured in terms of sectional title legislation. The owner is the witness, albeit with rights and an interest in the policy. The trustees have a duty to take charge of the insurance – in particular, claims.
So, to answer the question – the claim rejection letter arrives – what now?
The owner should receive notification of claim rejection via the trustees and/or managing agent soon after the claim is rejected. This usually comes in the form of a letter from the insurer advising of their decision, the reasons for the rejection and what the insured’s rights are.
The body corporate (as the insured) enables the trustees to decide whether or not the claim rejection was justified or not. The insurance advisor or broker should provide the trustees and/or managing agent with some guidance as to whether or not the claim rejection was fair. Addsure’s financial advisors check each claim rejection outcome carefully before forwarding it onto the client body corporate.
Where the body corporate agrees with the rejection and the owner disagrees, the trustee’s decision will stand as they are mandated to represent and attend to the claims for the insured. If an owner disagrees and is in dispute with the trustees over the claim rejection, the dispute lies between the body corporate and the owner. The insurer is not party to the dispute in this scenario.
Where the body corporate disagrees with the rejection and supports the owner (who also disagrees with the insurers decision), the body corporate should immediately write to the insurer, advising that they do not agree with the claim rejection and give reasons with substantiated information so the insurer can reassess the claim.
Should the insurer further reject the claim or re-confirm rejection, the insured can complain to the Ombudsman for Short Term Insurance: P.O. Box 32334, Braamfontein 2017. They are contactable via email firstname.lastname@example.org or telephone (011) 726-8900. The Ombudsman’s website can be found at www.osti.co.za from where the commercial complaints form can be downloaded.
Note that in sectional title, the complaint form is ‘Not Valid’ unless it is signed by two trustees or one trustee and the managing agent. The body corporate is the insured and any complaint or legal matter on behalf of the body corporate such as insurance claims should be dealt with by the body corporate.
Addsure provides clients with guidance and assistance with these rejections; sometime only to reassure owners that decisions were fair or where there is merit, guide owners and bodies corporate to take the correct steps in dealing with the Ombudsman.
Author : Mike Addison
Contact Addsure – The Leaders in Sectional Title Insurance – to get fit and proper advice from advisors who understand sectional title. Contact us in Johannesburg on (011) 704-3858; in Durban on (031) 459-1795 and in Cape Town on (021) 551-5069.