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Why Insurance doesn’t pay out

Why insurance doesn’t pay out all the time

Insurance claims are generally rejected on the following basis:

  • Type of claim: The type of claim does not correspond with the type of cover
  • Type of cover: The type of cover does not include what is claimed for
  • Non-payment of premium: Premiums not kept up to date
  • Exclusions: The policy cover excludes items claimed
  • Claim expiry date: Claims have to be submitted in full within thirty days
  • Fraudulent claims: Claim is identified as being fraudulent
  • Betterment: Claims can not be for a higher value then the insured item
  • Non-disclosure of facts: Vehicle used for Business and not domestic use only
  • Distortion of facts: Non-factual information related in claim

Why insurance doesn’t pay out : Case studies

Case Study 1: Non-payment of premiums

Driver A bought a vehicle and it was financed throug a well-known financial institution. He took out Comprehensive cover at a premium of roughly R500 per month. After a few months, Driver A omitted to pay his premium for two months. He was now in arrears to the amount of R1 000. Shortly thereafter, he was hijacked and his car was stolen. Driver A deposited R530 as part payment of the outstanding premiums.

Driver A’s claim was rejected due to non-payment of premiums.

Case Study 2: Non-factual information related in claim

Driver B initially stated in his claim form that he was on his way to Bedfordview to visit a friend of good reputation. He further stated that he drove via Hillbrow and was hijacked at a stop street. The Insurance Provider asked a couple of questions and eventually Driver B admitted that his car was stolen whilst parked in front of a seedy hotel in Hillbrow. At the time of the vehicle theft, he was in a room with a prostitute. He admitted that he lied because he was ashamed by his actions.

The Insurance Provider rejected the claim on the basis that Driver B’s failure to provide true and complete information regarding the incident constituted a material breach of the contract or insurance policy.

It appears that being truthful when submitting a claim is the most important.