Legalities Around Household Contents Insurance: Prevalent Problems & Possible Solutions

Published Date: September 14, 2023

During the course of last year, 2022, there were various media reports that there has been a significant rise in home insurance claims. Complimenting these reports was the announcement by the Short-term Ombudsman’s Office that there had been a rise in disputes relating to home insurance claims. There were many reasons attributed to this rise, but power cuts, with their undesirable repercussions, were the main reason. Some of these reasons are highlighted below. Given the events of the recent past, many homeowners have since procured home insurance policies. Others, due to many reasons, and mainly due to financial constraints, are either self-insured or they manage potential risks. Procuring cover is undoubtedly an important step towards guarding against risk. However, that is only a start – ensuring that there is an adequate cover in place in case of a risk eventuating, is more important. This requires constant proactivity on the part of an insured. Whilst this may seem tedious and cumbersome, such proactivity may be a saving grace at the claiming stage. In light of the foregoing, it is essential to look into some of the legalities around household contents insurance.

As stated above, there are many reasons that have been attributed to the rise in home insurance claims. The main one being loadshedding/power cuts. Along with loadshedding, there are possibilities of power surges and opportunistic crime, such as burglaries. In was reported in Moneyweb that burglaries had increased by 3.2% during loadshedding, and this figure had doubled to 8% during loadshedding on weekends. At this stage, burglaries are possibly the most prominent source of home insurance claims. There are also many other risks that may lead to home insurance claims.

Like other kinds of insurance claims, home insurance claims present their own unique challenges at the claiming stage. Whilst each case presents its own peculiar difficulties, there are common problems that frequently come up in home insurance claims. A problem of under-insurance is one of the major problems in such claims. Under-insurance refers to a situation where the sum insured is less than the value of the insured property or the cost of its reinstatement. Thus, in many home insurance claims, it usually appears at the claiming stage that an insured sum is less than the value of the insured property. Secondly, the disputes often stem from disagreement whether the destroyed/lost insured property should either be repaired, replaced or reinstated. Of course, an insured would prefer to have his/her property replaced, however, an insurer would rather repair (where an item is not stolen). Thirdly, disputes also arise as a result of refusal or failure by an insurer to pay for certain destroyed/lost items. Furthermore, disputes also arise over “ownership” of certain items. Insurers insist on proof of ownership, and the insureds are not always in possession of proof of ownership for all their belongings. In fact, in most cases, they are without such proof.

There are ways that have been invented over the years to address most of the problems delineated above. In relation to under-insurance, the legal principle, “average”, would ordinarily apply. For more information regarding this principle, see the article by JP Rudd – For our purposes, it suffices to state that, in general, being underinsured entitles an insurer to avoid a claim. Where a policy has an average clause, it would kick in. With regard to whether a destroyed property should be repaired, replaced or reinstated, the policy wording would ordinarily regulate the position. Where there is a dispute with regard to the items which were destroyed/stolen, having an inventory may assist in proving that you, the insured, owned such items. Alternatively, any form of documentary proof that may be available may be used. In reference to proof of ownership, things such as – photos/pictures, receipts, confirmatory affidavits by friends, family, neighbours, relatives, etc., purchase agreements, bank statements, etc., may be used to prove ownership. Some policies do cater for instances where ownership cannot be proven – they, for example, provide that only a certain percentage will be paid by the insurer. To mitigate against such difficulties, it is recommended that the insureds endeavour to keep proof of ownership of their items; prepare and routinely update an inventory and send these to their broker and/or insurer.

Home insurance claims may present complex problems. In such cases, an insured would need to involve his/her own assessor to try and challenge the assessment report from the insurer’s assessor. Importantly, an insured must be honest and provide all the available, helpful information and documentation, so that a claim is not prejudiced. Whilst it may be impractical to keep proof of ownership for all one’s items and belongings, it is advisable to keep some proof of ownership, particularly for the more valuable items.

Mtho Maphumulo
Senior Associate | Litigation Attorney

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