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Eldene Botha

Your Short-Term Insurance Guide: Claim Rejections and Expert Advice

At one time or another, you may have been disappointed when your short-term insurance company did not fully pay out a claim on your policy. Perhaps your laptop was stolen from your car; but was only covered if it was stolen from home. Or, more seriously, your beautiful holiday home is in a flood zone and only after it was flooded and you tried to claim for the damage did you discover that flood damage was excluded from your policy.


Chances are you thought you were covered in certain circumstances while – according to the terms and conditions of the contract – that was not the case. So how do you avoid this nightmare?


There are only a few key areas where clients get ‘tripped up’ when taking out short-term cover. Being well informed, listening to an expert’s advice, and taking the time to thoroughly read through the details of your policy may prevent any surprises when you need to submit a claim.


Ten of the most common – and easily avoidable – reasons why our insurance claims may be rejected or not paid in full:  

  1. Failure to notify your insurance broker of your change of address: Most policies have a clause which requires the policy holder to notify his/her insurance provider of a change of address. This could result in the lapsing of your cover at the time of an accident. Claimants often relocate without notifying their broker of the change. Submitting a claim using a different address than the one on you original policy documents may result in a repudiation of the claim.

  2. Driving without a valid driver’s licence: If the driver involved in an accident does not hold a valid driver’s licence, or a valid learner’s licence while being accompanied by a licenced driver, any subsequent claim would most likely be rejected.

  3. Vehicle not roadworthy: Make sure that your vehicle is roadworthy. Do a routine check of the condition of your vehicle’s tyre tread, windscreen wipers and lights. A vehicle that is not roadworthy will result in a rejected claim.

  4. Drunk driving: It cannot be stressed enough that driving under the influence of alcohol is dangerous, illegal and could result in a rejected insurance claim.

  5. The driver is not the ‘regular driver ‘ as envisaged in the policy: Some policies have a ‘regular driver’ (designated driver) clause, and if it is discovered that the driver at the time of the accident was not the ‘regular driver’, the claim could be rejected.

  6. Vehicle insurance * Exclusions. One of the main pitfalls in vehicle insurance is that people are not aware of the events not covered by the policy. For example: clients often claim for mechanical or electrical breakdowns, but these claims usually form part of the car’s warranty (if the car is still under a warranty) and are explicitly excluded from the majority of short-term insurance policies.

  7. * Use of vehicle. Make sure that you have declared the use of your vehicle correctly for either business use or private use, as cover will apply only when the vehicle is used as declared.

  8. Vehicle security. Most policies stipulate that you secure your vehicle by, for example, installing an immobiliser or alarm, and keeping it behind lock and key at night. Failing to meet these conditions may result in a theft or hijacking claim being rejected.

  9. Insured amount. According to an educational booklet published by the South African Insurance Association, the industry body for short-term insurers, there are three types of value insurers use to cover a vehicle:

  10. Retail value: The price a dealer sells the vehicle for.

  11. Trade value: The price the dealer pays to buy the vehicle.

  12. Market value: Halfway between the trade and retail value.

Vehicles are usually insured for their current retail value. Cars depreciate in value: A car bought for R200 000 – and originally insured for this amount – may be worth, say, R150 000 five years later. Although insurance companies regularly adjust the value at renewal date, it is still the owner’s responsibility to ensure that this value is correct. Vehicle owners should be aware that they will be paid out the retail value and not the original purchase price.


Tip: Consult your insurance broker on a regular base to confirm the value of the vehicle and the premium calculated on that value.

  1. Household contents

* Security conditions. All policies are conditional on you securing your home. For instance, you may be required to have an active alarm, burglar bars and security gates. Unfortunately, clients sometimes say they have met the security conditions, but when the assessor visits the property, the place is not as secure as stated in the policy. This can lead to a claim being rejected.


Avoiding these common pitfalls will prevent that dreaded letter of rejection from the insurance company or a claim not being paid in full.


Consulting an expert will reduce the possibility of claims being rejected. Intermediaries – or short-term insurance brokers – qualify via a series of exams and therefore they are informed regarding both the needs of the client and the structure and terminology of the policy. As a result, policies are structured to avoid common pitfalls and ensure that you are paid out when you submit claims.

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