Navigating the complexities of insurance claims in South Africa

IOL News

21-07-2025

Explore real-life stories of insurance claim disputes in South Africa, highlighting the challenges faced by policyholders and the importance of understanding your rights.
Image: SAPS
It seems that everyone has a story to tell about insurance companies seemingly trying to get out of settling claims.
One recent one involved someone who was hijacked. If that isn't traumatic enough, the jacker then went on a joy ride around the Alexandra township, near Sandton in Johannesburg, completely writing off the car before stripping it bare.'
There was no car left to recover. And the only reason it was recovered was because she phoned the tracking company. The insurance company had insisted that she use a policy-mandated tracking device.
To use a tired cliché, to add insult to injury, that person's insurance company tried to argue that the car was written off instead of forcefully stolen. Many policies have a clause saying that you have to give permission for someone else to drive your car, and this statement looked suspiciously like the insurance company trying to get out of paying her.
There are two obvious things wrong with this. The first is that the accident wouldn't have happened had the car not been hijacked, while the insured also argued back that permission was given. Through coercion. At knife point. A point confirmed with a broker.
Yet, Jaco Rupping, COO and shareholder at ASI Financials, says: 'In South African contract and insurance law, consent obtained through intimidation or threat of harm is not true consent'.
Another example I have heard is when an insurance company refuted a claim from a homeowner to fix damage because a wall had fallen over. In this instance, the company argued that they had never inspected the structure. The same structure, they never asked to look at.
Then there is the case of a laptop that was insured for replacement value under all risks and was accidentally damaged beyond economic repair. Laptops are fairly mission-critical, and it took a week for the insurance company to start actually working on the claim after the laptop was inspected. Twice: once by their service provider and once by the client's.
When the insured lost her temper with the insurance company, they insisted they needed to get a quote first, which had somehow recently become policy and was, despite the device being insured, in line with common sense, for replacement value. The claim was eventually paid out, two weeks after being lodged.
Rupping says turnaround times in claim assessments should always be reasonable. 'In this case, once a device has been confirmed beyond economic repair by both the client and the insurer's external assessor, it would be expected that the insurer act without undue delay,' he notes.
There are likely many more similar stories out there.
However, Hannes Bester, Manager of Adjudication at the National Financial Ombud Scheme, tells Personal Finance that the ombud hasn't seen 'a significant number of overturns on declined claims'. This, says Bester, may be attributed to most insurers conforming to principles of treating customers fairly.
The Ombud's 2024 annual report shows that most of the complaints resolved during the year were about motor vehicle insurance, which was followed by issues related to homeowners' insurance, and then other types of complaints, including house contents.
Rupping says many of the complaints stem not from outright 'rip-offs', but rather from breakdowns in communication, mismatched expectations, or poor claims handling from both parties.
'That being said, insurers have a legal and ethical obligation to act in good faith, and clients are fully within their rights to escalate claims they believe are being unfairly denied or unreasonably delayed,' he says.
Bester explains that an insurer can decline a claim if the insured is in breach of a condition or warranty entrenched in the policy agreement. Other reasons for declining a claim include an exclusion in a policy that will result in cover being denied for that sort of claim.
As an example: 'The policyholder is involved in an accident, and he was driving the vehicle whilst intoxicated. The policy agreement specifically excludes cover if the driver is under the influence of alcohol.' Bester says that, under these circumstances, the insurer can decline the claim. The same would go for if the damage was caused by a lack of maintenance or if premiums weren't paid, for example, he says.
Rupping notes that: 'Insurers are entitled and, in fact, obligated to investigate the circumstances of a loss'.
Bester says, in instances where claims are denied, consumers should first engage with the insurance company's complaints department. 'If this proves to be unsuccessful, the insured may explore other forums such as obtaining legal advice with a view to litigate,' or approach the ombud, he says.
PERSONAL FINANCE