Top 10 Reasons Motor Claims are Not Paid Out

Whether you’re driving across the country to visit family, or just popping out to the shops, it’s important to know that your car insurance will cover you, should you suffer a loss.

You never know when you’re going to be involved in an accident, so to avoid having your insurance claim rejected, it’s important to make sure your policy information is up to date and that your car is in good mechanical condition and fully roadworthy.

To help avoid disappointment, Christelle Colman, managing director of Elite Risk Acceptances, shares a list of the 10 most common reasons for car insurance claims being rejected in South Africa:

1. Driving recklessly or under the influence

Driving under the influence of alcohol or drugs is a criminal offence, as such motorists caught driving under the influence risk having their cover immediately nullified. An insurance claim can also be rejected if a driver is believed to have acted in a reckless manner and this behaviour is believed to be the cause of damage or destruction to a vehicle.

2. Premiums aren’t up to date

The simple rule of thumb here is: if you don’t pay your premium, you won’t be covered. When times are tough, the worst thing you can do is cut your insurance payments.

3. Unlicensed or unspecified drivers

When a motor insurance policy stipulates that cover is only provided for a specific named driver, an insurance claim will only be paid if this driver is driving at the time of the incident. The claim will also be rejected if the driver is not in possession of a valid driver’s license at the time of the incident.

4. Unroadworthy vehicles

The condition of your vehicle, such as broken windscreen wipers, missing mirrors, or a tyre tread below the legal limit of 1.6mm, can significantly increase the likelihood of an accident occurring. If you’re involved in an accident and further investigation reveals any of these pre-existing conditions, your insurance claim may be rejected because your vehicle is not roadworthy.

5. Personal or business use

When obtaining cover for your vehicle, you’ll be asked whether you use the car for personal or business use. If your car is used for business purposes, it’s assumed that you’ll be on the road more often than the average person – thereby increasing your risk of being involved in a car accident. This increased risk will affect your premium.

6. Vehicle not parked securely

Requirements for securely parking a motor vehicle in a garage differs between insurers; some will accept an off-street parking as acceptable while others may insist that the vehicle is be kept behind an automatic garage door. Insurance premiums are calculated according to what level of security the vehicle is kept in. It’s therefore vital to ensure that you’re adhering to whatever method of security you’ve agreed to in the insurance policy.

7. Vehicle inspection was not carried out

It’s common practice for insurers to insist that a vehicle inspection be done to help determine any pre-existing damage when taking out a new policy. If this inspection is not carried out properly, you are in breach of contract and your claim may be rejected.

8. Leaving keys in plain sight

This is viewed as the owner ‘failing to exercise due care’ and you therefore risk having a claim rejected in the event that the motor vehicle is stolen. Some insurers even stipulate that theft cover of the vehicle is excluded if the ignition keys are left in, or on, the vehicle.

9. Misrepresentation of underwriting details

This would include misrepresentations made about the driver’s details, personal or business use as well as insurance claims (drunk driving offences) and credit history, among others.

10. Lack of insurable interest

Insurable interest refers to the interest that a person has in an insured item. A person has an ‘insurable interest’ in something when loss or damage to it would cause that person to suffer a financial loss. In simple terms, it means you can’t insure items that don’t belong to you, even if you pay the insurance premium on the item i.e. a parent insuring a car that is registered in the name of a child and is paid for by the child. In this example the child must take out the insurance him or herself as the parent does not have an insurable interest in the item.

One of the most important things you can do as a policyholder is to make sure you understand the terms and conditions of your insurance policy – knowing exactly what you are and aren’t covered for. If you’re ever unsure, please contact Melissa on 044 382 0550.

* This article is provided for informational purposes only and should not be construed as legal or financial advice.