Please find below an article from Dennis Jooste on the top 20 reasons why claims are rejected.
Ombudsman for short term insurance – Top 20 reasons why claims are rejected

Being ignorant of the terms and conditions (Ts and Cs) of your short-term insurance policy is more likely to trip you up than a loophole in the policy itself. And you usually only get to terms with the Ts and Cs when it’s too late – when your claim has been rejected.At a recent meeting of the Acsis/Personal Finance Financial Planning Club, Dennis Jooste, the Ombudsman for Short-term Insurance, revealed the most common reasons for short-term insurers rejecting claims for motor, contents and homeowner’s cover, which in many cases involve ignorance of the Ts and Cs.

Jooste says more than half of all complaints to his office involve motor claims. Here’s why most motor claims are repudiated.

1. Unlicensed driver.

2. Unroadworthy vehicle. If you have an accident and your insurer finds out your wipers didn’t work or your tyres were smooth, your claim could be rejected on the basis of your car being in an unroadworthy state.

3. Reckless driving. Watch out for the “Failure to take care” clause, Jooste says. “This refers to recklessness, which is not to be confused with negligence.” Also look out for a “Breach of road traffic regulations” clause. If you were exceeding the speed limit at the time of an accident, your claim could be rejected.

4. Drunk driving.

5. Driver not the “regular driver”. Some policies cover the regular driver only. Others cover a named driver or any licensed driver. Jooste says misrepresentation by policyholders in this instance is common. Since young drivers pay higher premiums because of the risk they pose to the insurer, they may list a parent as the regular driver. When it is revealed that this isn’t true, the claim may be repudiated.

6. Total-loss policy. This cover applies only when the insurer deems your vehicle to be a total write-off. Sometimes policyholders have this type of cover and only realise it when their claim is rejected, Jooste says

7. Telematics data shows driver fault. Telematics is technology that can be used to track and recover your vehicle if it is stolen, and/or monitor your driving behaviour. Jooste says that some insurers insist on you fitting a telematics device to your vehicle. “The data gleaned from a telematics device can show a breach of speed limit or reckless driving leading up to an accident, which can result in your claim being rejected – and it is difficult to dispute the evidence,” he says. But some insurers use telematics to reward good driving. In other words, telematics can be used as a carrot or a stick. “Make sure you know how the insurer is going to use this information,” Jooste says.

8. Tracker device not fitted. Jooste says that if your cover is conditional on your car being fitted with a satellite tracking device, your claim will “probably” be rejected if you fail to comply with this condition.

9. Vehicle inspection not carried out. Jooste says some insurers insist on inspecting your vehicle at inception of the policy. This is so that there can be no disputes about pre-existing damage to the vehicle. If you neglect to comply, you will be in breach of your contract and can have your claim rejected.

10. Material non-disclosure at underwriting stage. Jooste says your claims record, a break in insurance cover, prior applications for cover being rejected, and judgments on your credit record are all material to the assessment of your risk, and it is imperative that you disclose such information. For example, people with a bad credit record have a higher propensity to file fraudulent claims than people with a clean credit record, he says. “If you lie and it comes out later, your claim may be rejected.”

11. Vehicle used for business. If you plan to use your vehicle for business, you need to disclose this to your insurer. “In my experience, insurers are very reasonable about this, and don’t look to load your premium if you seldom use your vehicle for this reason.”

12. Vehicle not parked securely at night. If you state that your car is parked securely – in a garage or off the street – at night, and, in the event of theft, it is found it was regularly in the street, your claim could be rejected.

13. Security device not fitted. If you’re required to have your car fitted with an alarm or a gear lock and you don’t comply, your claim can be rejected.

Homeowner’s insurance

Homeowner’s insurance is cover for your home (the building, not the contents). “Remember that the insured value is not what you could get if you sold your property; it is for the cost of replacing or rebuilding your home at today’s values. Beware of relying on bank valuations,” Jooste says. Even if the insurer is associated with a bank, make sure your home is not undervalued.

Jooste lists the following reasons for homeowner’s insurance disputes:

14. A peril you aren’t covered for caused the loss. If your loss was the result of “gradual deterioration” and “maintenance” issues, you aren’t covered, Jooste says. Homeowner’s insurance typically covers you for storm and fire damage.

15. Poor design and faulty workmanship. These are usually not covered.

16. Retaining walls not built to acceptable standards. Retaining walls have to be built according to engineering specifications, Jooste says. So if a landscaper – and not an engineer – built your retaining wall and it collapses, your insurer might not pay out.

17. Subsidence. If your house is built on clay, cover for subsidence is “normally excluded”, Jooste says.

18. Unoccupied premises. “If you leave your home unoccupied for, say, 30 days, without advising your insurer, it could have grounds to repudiate a claim,” Jooste says.

19. Moveables not covered. There are often disputes over what is a fixture, which is immovable, and what is a moveable item. Homeowner’s insurance covers you for permanent fixtures only.

Contents cover

Most claims for contents cover are rejected on the basis of the average clause (See “General principles of insurance”) because policyholders tend to under-insure, Jooste says.

20. Inflated and fraudulent claims. This is a big problem in the industry, Jooste says. “Don’t inflate your claims. Most policies carry a forfeiture clause, so if you are caught out, you may have to forfeit all benefits under the policy – in other words, the insurer is entitled to repudiate the entire claim,” he says.

– The Tradesure Team