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INSURANCE: Know Your Rights and Duties As a Policyholder

 



Recent Kwazulu-Natal Business News

As a policyholder one often hears of stories about insurance companies that have treated their clients unfairly, collecting their premiums and then not honoring their claims. Ask around your friends and you’ll probably hear more than one story, even if you have never experienced this personally, says René Otto, MiWay CEO

But there is good news: Did you know that the short-term insurance act means that as a policyholder you have more rights and are better protected than ever before? Below are a few tips to help you understand your rights and how to exercise them. But more importantly also keep in mind your own duties and responsibilities as an insurance client. Sadly, many times people feel they have been treated unfairly when in fact they have not held up their end of the bargain.

How Does Insurance Work for a Policyholder?


Let’s start with the real basics: What is insurance really? It’s a deal between you and an insurance company, made so that you can replace or repair a valuable item that gets lost, stolen or damaged. The insurance company agrees to pay you a fair value if you claim; in return you agree to pay your premium to the insurance company.

Premiums are calculated based on the risk of a loss occurring: the higher the calculated risk, the higher the premium will be. Premiums are also individually calculated which means that the insurer not only looks at the item you are insuring but also the person involved. Combining the perceived risk of the item and the person, your insurer will give you a premium at which they are comfortable to cover you as the policyholder. This is why it is important to share info about yourself with your insurer, well aware that incorrect or incomplete information might affect your future claims.

You have the right to get what you pay for

As a policyholder and South African consumer you have the right by law to be treated fairly and with respect. Your insurer must serve you to the best of its ability. Basically, this means that if you are paying for insurance cover and it is detailed in your policy schedule, you must receive it.

You have the right and the duty to be fully informed

Your insurer must, by law, offer you financial advice and products that best suit your needs. They may not sell you a product that you don’t understand, and must explain all the terms and conditions clearly. So as the policyholder you have every right to ask your insurer to explain anything that is unclear or difficult to understand. If the person you are talking to can’t answer your questions, or makes you feel that you are being difficult by asking questions, you can ask to speak to another agent or their supervisor.

Your right to be fully informed doesn’t mean you can sit back and expect your insurer to do all the work for you! It is your responsibility to read your policy documents, check that the information you supplied is accurate and inform your insurer if any details need to be changed. If the language of your policy document is confusing or a particular clause is hard to understand, you can and should ask for an explanation; policies are supposed to be written in “plain language”, without any legal jargon.

You have a duty to pay your premiums

This is quite simple: Pay your premiums on time, and enjoy the peace of mind of knowing that you are fully covered. If you don’t pay your premium, your insurer has the right to refuse to pay your claims. This could also affect your future premiums because you are seen as a poor-payer and thus a higher insurance risk. If something happens in your life that affects your ability to pay, talk to your insurer sooner rather than later.

You have a duty to be honest

Like your mother always said (we hope), honesty is the best policy. Don’t ever lie to your insurance company, or tell them less than the whole truth. If they ask you about previous claims or losses suffered, tell them the truth. If your teenage son is going to be driving your car regularly, let them know. If you’ll be using your bike for racing or your car for business, let them know.

If you accidentally drive into your own gate, don’t make up a story about someone bumping into you in a parking lot. Your insurance does cover you for embarrassing mistakes – but not for lying. If you are caught in a lie it will not only affect your current claim, but your future insurance cover and premiums as well. You could even face legal action for insurance fraud.

As the Policyholder you Have the Right to Complain


As the policyholder, if you are unhappy with the way your claim was handled, speak to your insurer first. Ask for the head of claims, and if that doesn’t solve the problem then go to the head of compliance. The insurer has a duty to deal with your problem in a way that serves both your best interests and theirs.

If you have no joy from your insurer, you can approach the Short-Term Insurance Ombudsman. This is an independent body set up to deal with problems that cannot be resolved directly with your insurer. The Ombudsman’s role is to act as a neutral mediator or facilitator. He or she will consider both sides of the case and make a ruling; if the insurer is found to have treated the customer unfairly, they can be forced to settle the claim.

You also have the right to take your problems to the public, using a forum like Hellopeter.com. Insurers that take their business and brand seriously will react quickly. These forums are also a great way to research prospective insurers and see how they handle their customers.

As a very last resort, you could seek legal advice and lay a civil claim against your insurer. This is a very expensive option, however, and you should only consider it if you have tried everything else without success and you are very confident of a ruling in your favour.

Remember: Knowing your rights and fulfilling your obligations will give you peace-of-mind cover and ensure far less painful claims experiences, ensuring a much more pleasant experience for you as the policyholder.

 
 
 
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