A thorough understanding of what is covered under your home and car insurance combined with regular and proper maintenance of your assets as per your contract is crucial to ensuring a satisfactory claims experience.
While the broad concept of insurance is generally understood as the process of acquiring coverage for your prized possessions to indemnify you in the event of loss or damage, it requires a thorough understanding of the contract you have agreed to, said Attie Blaauw, Head of Personal Lines Underwriting at Santam.
“As an insured consumer, it is important to know exactly what is and is not covered by your home and car insurance.
Many people don’t realize that as a policyholder, they agree to certain terms and conditions and are responsible for honoring their end of the contract. In addition, acquiring coverage without proper asset management has certain limitations.
Blaauw said the wear and tear of certain items and how, if at all, this is accounted for in the policy is another important factor to be aware of.
insurance principle
In defining insurable risk, Blaauw explained that insurance is simply a risk transfer mechanism that offsets the loss of or damage to insured property. This loss may arise when you are exposed to a known and agreed risk such as fire or theft.
“The aim is to indemnify or compensate the insured by putting them back in the same financial position they were in before they suffered a loss or damage.”
He added that the principle relies on the consumer paying a premium to an insurer to cover certain types of loss or damage to their property. These losses must have been caused by a sudden and unforeseen event.
The premiums paid allow an insurer to reimburse the customer for the cost specified in the insurance contract to repair or replace the lost or damaged items.
wear and tear
According to Blaauw, personal insurance policies are designed to respond to most risks from both natural and unnatural causes such as fire or explosion, lightning, burglary, kidnapping, earthquake, flood, storm, wind, hail or snow.
However, the focus remains on sudden and unforeseen events.
Risks arising from lack of maintenance and normal wear and tear are widely viewed as undesirable risks and are costs that should be budgeted for by the consumer.
He explained that there are typical exclusions in policy text that consumers should be aware of, such as: B. gradual deterioration from poor maintenance, wear and tear, mold, discoloration, rising damp, rot, insect infestation, vermin, weeds, roots, etc.
“It is the responsibility of every homeowner to ensure that regular maintenance is planned and carried out on their property as this will help maintain the integrity of the construction and avoid any weak points that severe weather events such as storms or flooding may expose.
This requires that the roof, structure and all of their internals, including the pool, lapa, perimeter walls and paving, must be maintained in good condition in accordance with the policyholder’s duty of care set out in the insurance contract,” he said.
According to the Short-Term Insurance Ombudsman (OSTI), the leading cause of homeowners’ claims disputes in 2020, at 47% and rising slightly to 53% in 2021, was denial of claims due to policy exclusions for damage caused by defective design, construction or workmanship, wear and tear, and poor building maintenance.
Santam statistics show that approximately 70% of internal property disputes stem from damage caused by wear and tear on household and homeowner policies.
The following examples are events that are typically excluded as wear:
• C claimed damage to her freezer.
The damage report received from the service provider indicated that the damage to the freezer was due to the age (wear and tear) of the item that led to the damage to the item and no insured cause contributed to the damage.
• T claimed water damage to the home caused by flooding.
Upon inspection, it was found that the paint was bubbling and peeling, and there was old mold on the walls and even fungus growing out of the carpet, all suggesting the damage wasn’t caused by a single event, but over time of time gradually appeared.
• K reported damage due to cracks in his swimming pool, claiming it was storm damage. A commissioned engineer determined that the cracks in the pool developed over time due to the normal expansion and contraction of the soil due to an increase in humidity.
content and that no storm or other insured cause contributed to the cracks in the pool.
Policyholders must clearly understand the difference between accidental loss or property damage resulting from an insured event and damage from wear and tear, which is typically not covered by insurance and requires periodic maintenance by the policyholder.
“Some insurers, like Santam, may offer maintenance on a Geyser cover for a certain sum insured for an additional premium, and this typically can cover rot, hidden defects, rust, gradual deterioration and wear and tear,” Blaauw concluded.
