Insurance to most people is a grudge purchase. We buy insurance and pay our monthly premiums and then forget about it until we want to claim. We are sold policies where, if we do not claim, we get a later benefit. Ever wonder about losses that you suffer and do not claim for and what effect it has on your policy?
In the recent unreported judgment in Sherwin Jerrier v Outsurance Insurance Company Limited the Pietermaritzburg High Court was faced with such a question. Mr Jerrier claimed for damages to his car caused by an accident that he was involved in on 8 January 2010.
The insured (Mr Jerrier) took out a policy in December 2008. He did not report a loss that he suffered in April 2009, after inception of his policy, to his insurer. The damage to his vehicle amounted to over R200 000 and the incident attracted further third party liability.
The specific policy as most, if not all policies do, provided that “you need to inform us immediately of any changes to your circumstances that may influence whether we give you cover, the conditions of cover or premium we charge. This includes incidents for which you do not want to claim but which may result in a claim in the future.”
As with most of our household policies, these are monthly policies, and we continuously need to make disclosure to the insurer of things such as losses or damage, moving to a new house, et cetera. The court in this instance found that the reasonable man would have concluded that the previous losses would, from a claims history perspective and also from a moral risk perspective, be indicative of a change in his circumstances. The Court found that the insurer was correct in not accepting liability for the loss suffered in January 2010.
In short, even if you do not claim, let your insurer rather know of a loss or a potential claim. Anything that may be deemed to influence the risk or would indicate a change in circumstances, such as moving to a new property, needs to be disclosed to the insurer. It is not unreasonable to expect this of the insured.
This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)