Reading the fine print is often assumed to be the thin line between getting an insurance claim and feeling that you have been robbed. Even those who simply rest in ignorant bliss that having insurance guarantees a successful claim. After all, premiums are paid every month with the expectation that, when something goes wrong, the policy will kick in.
According to Ryno de Kock, head of distribution at PSG Insure, claims can be rejected not because of complex fine print but because of everyday assumptions about what is covered, how policies work, or how incidents should be reported.
He identifies five key issues that can cost policyholders:
Misunderstanding policy exclusions
A report by the ombudsman for short-term insurance shows policy exclusions are the main reason why insurance claims are rejected. Many policyholders overlook or fail to go through their policies, which can lead to great disappointment at the claims stage when they find out they are not covered for a specific event. For example, “Basic home insurance policies may exclude damage from natural disasters, while many business insurance policies do not include cyber coverage,” says De Kock. An insurance adviser plays an important role in providing guidance on such matters.
Lack of “duty to care”, maintenance or wear and tear
While insurance protects your property, it is not a substitute for regular maintenance. Claims linked to neglected upkeep — such as leaking roofs left unrepaired, faulty wiring, or non-functional alarm systems — may be reduced or rejected.
De Kock says if damage occurs as a result of poor maintenance or failure to exercise due care, the insurer may determine that the loss was preventable. For businesses, this can extend to compliance requirements such as fire safety measures, security protocols, and equipment servicing.
Inaccurate or outdated information
Under-insurance remains a significant issue in personal and commercial lines. When assets are insured for less than their true replacement value, insurers may apply the average clause, resulting in a reduced payout. Regular reviews are essential to ensure cover keeps pace with reality. It is equally important to ensure that all material information is disclosed accurately and updated when anything changes. This includes renovations, new equipment purchases, increases in stock levels, changes in business operations, or alterations to security measures.
“At the claims stage, policyholders must also provide supporting documentation such as proof of ownership, invoices, valuations, and maintenance records where required. Incomplete or inaccurate disclosures can lead to disputes, delays, or reduced settlements.”
Delayed reporting
As most policies require incidents to be reported within a specific timeframe, waiting to notify your insurer can complicate or invalidate a claim. In cases of theft, liability or commercial loss, delayed reporting can also affect investigations and recovery efforts. The best approach is to notify your insurer or adviser immediately and allow them to guide the next steps.
Unpaid premiums
It may seem obvious, but lapsed policies due to unpaid premiums are a frequent cause of rejected claims. If a premium is not paid within the agreed grace period, cover may be suspended or cancelled entirely. While automatic debit orders reduce this risk, policyholders should still monitor payments and ensure that premiums are paid on time.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.