Household Contents Insurance Claims

Household Contents Insurance Claims are unfortunately prone to be exaggerated by the insured. Policy holders are known to either exaggerate the value of the items lost or to add items that were in fact not lost to their claim list. Another common fault of claimants is to give incorrect descriptions of valuable items lost thereby increasing their perceived value.

In accordance with requirements contained in most policies, the onus is on the Insured to supply documentary proof which the Insurer may reasonably require to establish the existence and the value of the goods claimed. The definition of reasonable in this regard will depend on the nature and value of the various items.

If the lost item is an expensive piece of jewellery, a valuation certificate and proof of place and date of purchase might well be deemed a reasonable requirement, whereas for a camera purchased for cash some years back it might be reasonable for to be able to recall the approximate price and place of purchase.

Policy holders justify this fraudulent behaviour by arguing that the Insurer will not pay out their full claim and these misrepresentations will ensure that they are placed in the same position as what they would have been had they not suffered the loss. Those guilty of deliberate misrepresentation, exaggeration of value or claiming losses that did not occur stand a very real risk of having their claim repudiated in its entirety. Any taint of fraud in a claim is generally treated severely by Insurers and besides repudiating the claim often results in cancellation of the insurance policy.

This will place you in an extremely difficult situation as you will be blacklisted and no insurance company will be willing to sell insurance to persons whose policies have been cancelled by another insurance company on the grounds of fraud.

If the Insured is able to prove that the misrepresentations were genuine mistakes and exaggerated values were an optimistic opinion genuinely held, then the Insured may approach the Ombudsman with a request to persuade the Insurer to reconsider the claim and re-instatement of the policy.

A "Contents" Policy normally insures all the contents of a particular residence against loss by any insured risk specified in the Policy, which are in the residence at any time during the operation of the Policy. The Insured initially places a value on those contents by insuring them for a particular sum. That sum, less any applicable excesses under the Policy, is then the maximum that the Insurer will be required to pay in the event of a total loss of the contents. If the value of the total contents is found to be of less value then the Insurer will pay out the lesser amount less any applicable excess.

Failure to adjust the insured value of the household contents for additions made to the contents, or the increase in value of the contents over time is a much more serious risk and it is advisable to reconsider the insured value on a regular basis.

If the Insured purchases contents insurance and places a value of R100, 000 on those contents for insurance purposes and makes no further adjustments to the sum insured then the maximum liability of the Insurer would be R100, 000 irrespective of the actual value of the contents. If the actual value of the contents is R 200,000 at the time of the loss and everything is lost, the Insured will only recover R100, 000 less excesses. But if say only goods to a total value of R50,000 are lost then the Insurer, by applying average (because it has in fact been covering goods to a total value of R200,000) will pay out only one half of the value of the lost goods, i.e. R25,000 less excess. The mathematical calculation, if average is being applied is the following equation: - Total Insured value divided by Total actual value multiplied by the Value of loss. (100000/200000 x 50000) = 25000

All in all it is in your own best interests to ensure that the contents of your residence are insured at their correct value.