In essence, insurance covers unforeseen, single and sudden events and not damage that has occurred gradually over time.
“We encourage insureds to ensure their properties are properly and regularly maintained as this is their responsibility,” Osti said.
However, the ombud cautioned, the insurer has to prove a lack of maintenance or a structural defect caused the collapse or damage on a balance of probabilities.
“We have overturned quite a few claim rejections after the insurer was not able to provide sufficient evidence to support its [gradual deterioration] case,” Teixeira-Mckinon said.
In some cases a partial award is made, recognising the damage was caused partly by a flood, for example, and was partly due to a structural defect.
In one case, included in Osti’s 2022 annual report, a homeowner claimed for storm damage, providing his insurer with a damage report stating that gale force winds had caused a gable wall, which held up a satellite dish, to collapse.
The insurer chose to conduct its own “desktop assessment” of the damage and concluded: “The section of bricks must have been cracked or loose due to poor building practice. This cannot be caused by wind alone. The section of wall started to lean due to a defect to that part of the gable wall.”
Homeowners must ensure structural integrity for building insurance
Image: Sandile Ndlovu
Paying an insurance premium on your home is a strain on top of your ever-rising bond repayments every month, but at least you know you’re covered if the property is damaged in a massive storm, right? No, not necessarily.
Insurance companies don’t have the funding or the resources to do structural assessments on residential properties when you take out building or “homeowners” insurance, and they are not legally obliged to do so.
That sobering reality, shared by the ombudsman for short-term insurance (Osti) CEO Edite Teixeira-Mckinon on Tuesday, is lost on many homeowners until claim time.
Teixeira-Mckinon was speaking at the joint launch of the 2022 annual reports of her office and that of the ombudsman for long-term insurance, the two organisations having undergone a “soft amalgamation” in 2020.
“It is the homeowner’s responsibility to bring in a structural engineer to see if there is anything untoward and to highlight what can be done to avoid an insurance claim being rejected [in the future],” she said.
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Of the 11,542 complaints registered by Osti during 2022 — an increase of 17.8% over 2021 — 647 related to the KwaZulu-Natal floods of April and May. Just over 200 complaints related to rejected claims for power surge damage to appliances and 57 were Sasria-related claims arising from the civil unrest in July 2021.
The biggest category of consumer complaints related, as in previous years, to motor vehicles at 42.7%, followed by homeowner’s insurance claims at 23.3%.
The primary reason for homeowner’s insurance claims rejection was on the basis of “gradual deterioration, a lack of maintenance, or wear and tear”.
“This is an exclusion in most, if not all, policies under this category,” Osti said in its report. “Even though an insured event may have occurred, such as a storm, an insurer may be entitled to reject a claim on this ground if it is found the primary cause of the damage was gradual deterioration, a lack of maintenance or wear and tear.”
In essence, insurance covers unforeseen, single and sudden events and not damage that has occurred gradually over time.
“We encourage insureds to ensure their properties are properly and regularly maintained as this is their responsibility,” Osti said.
However, the ombud cautioned, the insurer has to prove a lack of maintenance or a structural defect caused the collapse or damage on a balance of probabilities.
“We have overturned quite a few claim rejections after the insurer was not able to provide sufficient evidence to support its [gradual deterioration] case,” Teixeira-Mckinon said.
In some cases a partial award is made, recognising the damage was caused partly by a flood, for example, and was partly due to a structural defect.
In one case, included in Osti’s 2022 annual report, a homeowner claimed for storm damage, providing his insurer with a damage report stating that gale force winds had caused a gable wall, which held up a satellite dish, to collapse.
The insurer chose to conduct its own “desktop assessment” of the damage and concluded: “The section of bricks must have been cracked or loose due to poor building practice. This cannot be caused by wind alone. The section of wall started to lean due to a defect to that part of the gable wall.”
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The claim was denied on the grounds the damage to the gable wall was not due to an insured peril, but rather a defect and poor building practice.
However, Osti adjudicators found the insurer’s damage report was based on “must have been”.
“The assessor’s findings were not based on admitted or proven facts and amounted to speculation.”
As a result, the insurer paid the claim.
• Early next year the two insurance ombudsman offices are set to merge with the ombudsman for banking services and the credit ombud to form the Financial Services Ombudsman Scheme.
GET IN TOUCH: You can contact Wendy Knowler for advice with your consumer issues via email: consumer@knowler.co.za or on Twitter: @wendyknowler.
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