The Case of Mrs M’s Stolen Vehicle
On 21 July 2020, Mrs M’s car was stolen while she was staying with her brother in Brakpan, Gauteng. She submitted her claim to the insurer and on 14 August 2020 she was informed that her claim had been rejected because she had failed to update her residential address, from Bloemfontein to Brakpan, with the insurer.
The insurer’s consideration
Mrs M approached the insurer’s internal dispute officer to express her dissatisfaction with the rejection of her claim. On 4 September 2020, Mrs M was informed that the initial decision to reject her claim was overturned and that the insurer would settle the claim on a proportional basis by deducting the percentage of the premium that would have been paid to the insurer if Mrs M had updated the address on the policy. The insurer explained to Mrs M that the reason it had deducted 29,12% from her claim was because she had been based in Brakpan, Gauteng, for two months and had failed to inform the insurer about the change of her risk address during that period.
The insurer said that since it had only received 70.88% of the correct premium, it would only pay 70.88% of the claim.
Mrs M’s response
Mrs M said that the insurer was not acting in good faith and deemed the insurer’s decision to be unfair because she was initially visiting her family on a temporary basis. She said that she had no choice but to remain in Gauteng due to the Covid-19 pandemic lockdown. Mrs M requested a full pay-out of her claim.
OSTI’s recommendation
OSTI noted that Mrs M did not move to Gauteng permanently but remained in Gauteng due to the national lockdown. The vehicle had been at the “new” risk address for only one month before being stolen and, therefore, OSTI was of the view that a proportional settlement was inappropriate.
OSTI requested the insurer to rather settle the claim by deducting the actual difference in premium for the month that the vehicle was at the “new” risk address.
The insurer agreed with OSTI’s recommendation and settled the claim accordingly.