Do banks cover you for natural disasters?

Following the Orkney earthquake on 5 August 2014, Justmoney investigated whether or not insurers would cover household for mining related earthquakes. A year on, we are looking at whether the banks, in particular, have changed their policies.
 
Compared to last year’s results regarding earthquake cover, Justmoney has found that the banks’ policies are on par with last year’s findings. Standard Bank, Nedbank and First National Bank (FNB), will cover clients for mining related earthquakes, however, certain exceptions apply. Absa’s idirect insurance policy does not cover mining related earthquakes, however, the bank highlighted that it has other insurance offerings as well, which do.
 
To see last year’s report, click here.
 
Standard Bank
Standard Bank offers clients cover for natural disasters, however, there are exceptions where claims will not be paid if the bank can prove that there was negligence, poor workmanship or other factors that may have contributed to the damage or loss which resulted in the claim being made.
 
Earthquakes are covered by Standard Bank’s insurance provider (Standard Insurance Limited), even if they are the result of a mining related incident, revealed Johan van Greuning, head of Standard Insurance Limited.
 
If the earthquake is the result of a mining related incident the excess payable is R2500, or one percent of the sum insured (whichever is higher). However, “If the earthquake is not mining related and the damage is proved to be earthquake related the insured will be covered for the value of the damage or loss as earthquake is an insured event. The excess for earthquake is R750,” noted van Greuning.
 
The policy relating to earthquakes has not changed from what Justmoney found last year, with the same excess payable if the earthquake is the result of a mining related incident.
 
When claiming for an earthquake, it must be proven that it is not mining related before the claim is paid. In order to determine the cause of the earthquake (natural or mining), van Greuning said: “The industry work with Council of Geoscience which determines the cause. When earthquakes happen in areas of heavy mining activity and when it originates at depths less than 3.5km it is invariably mining related.
 
“Mining activity can trigger a natural earthquake. Naturally, where the epicentre is between 3.5km and 10km deep it is likely not caused by mining. If in doubt, as has happened in the past, claims are entertained as non-mining related.”
 
Nedbank
Nedbank will cover insurance claims that are a result of natural disasters, including earthquakes that are a result of mining related activities, however, there are still some exceptions that will see claims not being paid.
 
Nedbank covers earthquakes regardless of whether or not they were the result of a mining incident. The excess for earthquake related claims is R2500, the highest amount that Nedbank charges for excess (this amount is also applicable for landslips).
 
Lance Blumeris, executive head of insurance at Nedbank, explained that this is “due to the infrequent nature of the claims, the excess is set up higher to ensure a lower premium is charged.”
 
Nedbank will cover to the replacement value or the sum insured of the property, unless it can be proven that poor or substandard construction contributed to the damage, in which case the claim would be rejected.
 
Absa
Absa has two insurance offerings, namely idirect, which is a direct insurance company aimed at customers that prefer dealing directly with the insurer, as well as Building/Homeowner’s Insurance which is offered through Absa Insurance Company, which is offered to the public via brokers. When it comes to idirect, earthquakes are covered as follows:
 
Under idirect cover, customers are covered for earthquakes, but not if it’s a mining related incident, explained Jacques Pretorius, managing director of idirect.
 
“The customer is covered for the value of the damages up to the sum insured on the policy,” revealed Pretorius.
 
The excess “will be the building excess specified on the policy as agreed with the customer. No additional excesses are payable,” added Pretorius.
 
In order to determine if the earthquake is ‘natural’ or the result of a mining operation, Pretorius pointed out that “experts will be appointed to investigate and to determine the cause.”
 
Furthermore, Pretorius stated: “The Absa idirect policy does not cover earthquakes resulting from mining operations. In terms of the earthquake incident near Orkney in August last year, no idirect claims were rejected on the grounds that the tremors were caused by mining activities. While terms and conditions form the basis of the contract, as part of our commitment to treat customers fairly, each claim is assessed and considered on its own merits.”
 
First National Bank
 
FNB was unable to respond to questions regarding their home insurance policy by the time of publication. However, on their website, it states that you can insure the physical structure of your home. It also reveals that you are covered for the following events/incidents:

• Fire, lightning and explosions.
• Impact by animals, vehicles, falling trees or parts of trees; aircraft or articles dropped from above.
• Loss or damage caused by faulty water systems, including burst, leaking or overflowing geysers, water supply tanks, cisterns and water pipes.
• Loss or damage caused by deliberate or wilful acts.
• Erosion and / or subsidence.
• Natural disasters including storm, wind, flood, hail, snow or earthquake damage.
• Theft or attempted theft where forcible and violent entry to (or exit from) your property causes damage to the premises.
• Breakage or collapse of fixed radio or television aerials, satellite dishes or masts.

 
However, when Justmoney investigated earthquake cover last year, we found that FNB did cover earthquakes, with no exceptions for mining related incidents.