Many business owners and consumers who take out insurance often overlook the value of immersing themselves in how the claims process works.
Elizabeth Mountjoy, Private Wealth Manager at FNB Insurance Brokers, says submitting a claim forms an integral part of an insurance policy agreement. When taking out a policy you are essentially purchasing the potential ability to claim a partial or full value of the insured item in the event of a loss. Therefore, the insurer’s decision to make a settlement is often determined by the outcome of the claims process.
“Knowing what goes on behind the scenes and being familiar with factors that insurers consider when accessing a claim cannot be overemphasised,” says Mountjoy.
“Some policy holders only seek to understand how the claims process works when dealing with a loss, which often exposes them to mistakes that may result in a lower than expected pay-out,” she adds.
Mountjoy says every policy holder should be aware of these key insurance claims factors:
- Impact on premiums: when reviewing your policy, insurers often weigh the value of the claims submitted versus the premiums paid. This calculation is known as a ‘loss ratio’ which indicates your profitability as a client to the insurer. Based on this information, insurers can then determine future premiums and the excess you should be paying. Policy holders who select a voluntary excess, opt to self–insure for smaller items and reserve their policies for larger losses. This assists in reducing premiums. However, you would need to ensure that you are able to pay this voluntary excess in the event of a loss.
- Maintenance related damages: insurance requires regular upkeep and maintenance of your asset. By doing regular maintenance you mitigate the possibility of a claim and possible unnecessary rejection of your claim.
- Defective design or workmanship: be wary of service providers you use for any form of alterations or upgrades, as most often, if they are not accredited, they could cause more damage which would be uninsured.
- Security: always ensure that the insured item is kept safe at all times. The onus is on you to keep your belongings secure.
- Claiming from the insurer: insurance is a principle of good faith, whereby the insurer agrees to insure your risk on receipt of agreed premiums. You have the responsibility to give true and correct information about yourself. You may experience problems with your claims if it is found that some of the information is untrue. By following these steps, you will ensure an easier claims process: (a) The onus is on you to prove your loss and providing proof of ownership for items is essential. (b) Provide your broker/insurer with as much information as possible relating to the incident. (c) Remember to notify your broker/insurer of the loss within 30 days. (d) Certain claims require that you report the incident to the police. The case number, together with the relevant SAPS details to be given to the insurer.
- Third party/recovery claims: these types of claims are mostly applicable to vehicle insurance. They are not always guaranteed as more than 70% of the vehicles on South African roads are uninsured. Furthermore, recoveries work on the Law of Collision whereby both parties could share the responsibility of the accident and the damage proportionately spread based on the percentage of responsibility of damage. The insurer often acts on behalf of the insured when dealing with the third-party insurer and will negotiate and agree on a settlement.
“Lastly, when claiming never dispose of the damaged/wrecked item (salvage) unless advised to do so by your insurer. Salvage proves ownership and confirms the damages of the claimed items,” concludes Mountjoy.