Following the recent court decision on Jerrier vs. Outsurance questions arise on whether or not it is necessary to report every trivial loss to your insurer to avoid a rejection of a claim at a later stage.
In the Outsurance case the court upheld the rejection because material information was not disclosed. The rejection was not based on the non-disclosure of non-material small claims.
Donald Dinnie, Head of Norton Rose South Africa Disputes Resolution, defines the duty of good faith as the duty not to misrepresent, or omit to disclose facts material to the assessment of the insured risk to be insured. The duty to disclose exists each time a policy is entered, renewed or varied.
The South African Insurance Association (SAIA) and the Financial Services Board (FSB) in a joint statement on 11 April said that that Insurance companies undertook not to reject motor car claims on the grounds that customers do not report minor incidences (not material to the assessment of the insurance risk).Alexander Forbes Insurance (AFI) position on the matter has always been that you only need to disclose material matters. The duty of disclosure continues throughout the contract, so you need to reveal change in risk as it happens.
According to AFI MD, Gari Dombo, if the vehicle damage is less than the excess, its clients are not required to report the incident. “After all, one of the main reasons for an excess is to reduce costly administration of small claims, this applies to other small non motor losses where the cost is less than the policy excess” continued Dombo.
Dombo said that it was in clients’ best interests to make their insurance firm aware of any accidents especially if they were uncertain of the extent of the damage. AFI would in these cases assess the vehicle and determine if the cost of the repair will be greater than the excess.
Dombo adds that clients are obliged to ensure continuous disclosure of material information; this guarantees that claims are properly investigated and clients have recourse in the event of third party involvement. While one may not expect each small claim to be intimated to the insurers it is in the interest of the client to try and report each and every incident to avoid any potential claims disputes.
Accidents involving third party must be reported to your insurance company, even if the damage is trivial, as it is always possible that the third party claim for injury or damage will pop up later on. If you have not informed your insurer of this incident, there is a strong chance that your liability cover will not respond.
It is a prerequisite that accidents where damage has occurred be reported to the police as a case number must be obtained in order to claim from your insurer.
Dinnie adds, “A good rule of thumb is when in doubt to make the disclosure or to obtain the guidance of a good broker.”
Disclosing accidents that you had prior to taking out the current short-term insurance policy is important. Insurance is obtained to guard you from the financial load of an accident and not reporting an accident could result in costing you more in the long run concludes Dombo.