Are you on shaky ground with your house insurance?

Are you on shaky ground with your house insurance?

Many people think they’re covered if their home were to be damaged in a storm, only to find out at claim time that they aren’t. On Consumerwatch this week, Wendy shares the final instalment of the fallen-down wall saga.

Insurance policy papers
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Listen to the audio and read the details below: 

A very important one it is, too, to set the record straight, and to try to prevent others from having their claims rejected. There is a huge amount of money at stake.

First, the recap - Derrick and Philisiwe Mathe of Umlazi witnessed the front wall of the property collapse in the ferocious storm of Easter Monday this year. The wall was built in 1987, and the Mathes bought the house in 1997.

In the 22 years since, they’d never missed an Absa bond payment or Absa Insurance premium.

But the claim was denied.

Absa Insurance told them: “Having looked at our service provider’s photos, report and applicable policy terms and conditions, there is not doubt that the boundary wall collapsed due to gradual deterioration and defects in design."

“The retaining wall does not comply with good building standards and the SANS specification for retaining walls. While the homeowner's policy provides cover for storm and wind, it does not cater for loss or damage brought on by wear, tear, defective construction and maintenance related issues."

The couple lodged a complaint with the Ombudsman for Short-Term Insurance, but that office sided with the insurer.

The cost of rebuilding the wall is almost R30,000.

After Consumerwatch took the case with the Absa Insurance, I asked: “If the wall was defective in design and had gradually deteriorated, how did it survive all manner of storms for three decades?" 

“Is Absa Insurance comfortable that it has ticked the Treating Customers Fairly box in this case?”

The insurer then offered the Mathes R10,000 as a goodwill gesture, while saying that they stuck to their original decision.

Then Durban insurance assessor Marthinus Nothnagel, of D2C Loss Adjustors contacted me, saying he’d like to assess the wall and compile an independent report for the Mathes, free of charge.

That happened last week, and Marthinus got back to me to say that Absa did indeed have a strong case to reject the claim, because of several issues, mainly that the wall began to lean over last year already after a storm and no steps were taken by the family to prevent further destabilisation of the wall.

He suggested that the Mathes accept Absa Insurance’s offer of R10,000, which they have told me they now will, thanking us for our help.

But Marthinus said of the claims being repudiated due to non-compliance with policy wording, about 80% of clients were never told how the policy works, what was covered, what was excluded and what precautions need to be taken after a loss.

In most of those cases, he said, the insurers are banks who 'forced' their clients to sign the homeowner's insurance policies during 1997 and 2005.

“Many never got the policy wording, setting out what they were covered for and what they were not,” he said, “and have never been contacted to have their policies revised or to see if their needs have changed.”

Here’s Marthinus’ advice:

These homeowners’ insurance policies have as a standard exclusion: “Loss or damage caused by or attributable to a lack of maintenance, damage caused over a period of time, faulty or defective workmanship or construction, faulty design of the dwelling, or damage caused by vermin, insects or fungi; any structure which is not erected in accordance with building regulations applicable at the time.”

So read your policy wording and make sure that you understand all the extensions and the exclusions. If you are not sure about something, ask.

Make sure that your Broker/Insurer contacts you at least once a year to make sure that your policy stays up to date. Should this not be the case then you might have a problem at claim time.

And if you’re about to buy a new home, know this:

You are not obliged to take the Homeowners Insurance offered by the bank giving you the home loan.

Marthinus suggests finding a “Specialist Product” for structural Insurance as they have extensions on their policies that cover items that might be excluded by other Insurers.

*The person that does the valuation on you property on behalf of the bank, does so only to determine the value of the property. They do not do a risk overview for Insurance purposes.

*The companies that do risk overviews - looking at the structure of the building, boundary walls, retaining walls, liability issues, maintenance issues - all the things the insurance assessor will examine when you make a claim - charge anything from R750 to R1750. 

*Make sure that all the structures on the property are on the building plans and that they have been approved. The last thing you want is to find out that the addition made by the previous owners were not done in accordance with building regulations and are now therefor not covered under your policy.

ALSO READ: Spare a thought when buying a car

To contact Wendy, go to her Facebook page and click on the Send Email tab.

In case you missed any of the past Consumerwatch shows, find them below:

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