insurance vows for a happy ‘marriage’
It is rare, but not uncommon, for the relationship between the customer
and his or her insurer to sour. This may result in the insurer having to take
what seems like drastic action by cancelling the policy of the customer.
The problem is that once you are fired from one insurer, it is very
difficult to get a decent insurance policy elsewhere at the same premium rate,
given that you will have a record.
The first thing to remember
is that it starts with a contract between you and your insurer. It is
easy to forget that the brief interaction with an insurance broker, online
platform or telesales consultants is actually the start of a no-nonsense,
It therefore pays to know what your and your insurer’s rights and
responsibilities are so that you can avoid finding yourself in this unfortunate
Till death do us part?
You should think of your insurance policy as a marriage or meeting of
minds between you and your insurer.
You are making commitments and promises to your insurer in return for which
they protect your assets from predefined loss events.
Local social media sites recently lit up with a flurry of posts from an
unhappy motor insurance client after her insurer cancelled her policy.
Consumers were quick to bash the insurer; but slow to consider the rights and
responsibilities that the insured and insurer had agreed to. In this case the
insured had made four claims against her policy in the preceding five months,
which did not bode well for her claim record and ultimately led to the
cancellation of her policy by the insurer.
Most often it
comes down to understanding the fine print.
If you make too many claims in quick succession, your insurer is within
its rights to fire you. The law is clear about what is required from each party
to an insurance contract; your policy wordings contain exit clauses for both
you and the insurer in the event the relationship goes sour.
In such an event, the insurer is obliged to give the policy holder at
least 31 days’ notice of the intention to cancel the policy. They must give
reasons in that cancellation letter. If this process is not followed, then the
insured has the right to dispute it.
Below are the three most common circumstances in which an insurer might
cancel a policy:
• Failure to meet your monthly premium payments.
There are few arguments in the case of a non-payment cancellation as we
are all familiar with the no pay, no service construct. Consumers are advised
to contact their insurers if they run into financial difficulties so that a financial
arrangement can be made, failing which the insurer may cancel the policy in
line with the industry’s Policyholder Protection Rules.
• If you are dishonest when taking out the policy or when claiming
Honesty is the foundation of every business relationship and is a
critical part of the contract for insurance.
We use the information that you share with us when taking out your policy to
determine your risk profile and offer you a fair price for your insurance
cover. Any misrepresentation that you make when taking out the insurance policy
means that you and the insurer enter the contract with incomplete or untrue
information. Upon discovery, the insurer can elect to void the policy, by
returning all your premiums as if the policy never existed or cancel the policy
Things become complicated if the dishonesty happens at claims stage. Many
insureds try to blur the facts surrounding a loss event because they know the
claim will be rejected if the true facts get out. If your insurer even suspects
that you have contravened one of the exclusion clauses in your policy wording,
such as driving under the influence of alcohol, they can refuse your claim and
cancel the policy.
• If your risk profile changes
Your insurer bases your monthly premium on a careful assessment of the
risk you present. It does so by weighing up your responses to a set of
questions when you buy insurance. If your actual claims exceed the claims
suggested by your risk profile the insurer acts, usually by adjusting premiums
higher or, in extreme cases, by cancelling the policy. This type of
cancellation seems unfair because multiple claims could result from an
insured’s bad luck. We engage with clients before cancelling on this basis; but
making too many claims over a short period of time has consequences.
For advice on your policy please feel free to contact our offices 031-5021922
or visit our website www.esbrokers.co.za
Written by Christelle Colman – spokesperson for Old Mutual Insure
Featured in FANews
Photos by Pixabay