How quickly do insurance companies need to respond?

Following a natural event, such as a storm, flooding or earthquake, how fast is an insurance company required to address any claims associated with this event?

Over the past week there has been a hailstorm in Bloemfontein, leaving the ground covered in large pieces of ice, while in Pretoria, a strong storm saw the roofs of several houses blown off. Following these events, Justmoney investigated your insurance company’s obligations following these types of instances.

What is covered by insurance?

Santie Stevens, from Insurance Busters, highlighted that under building insurance cover, the policy wording that forms the basis of the contract normally defines what is covered under insured events. This would include mention of storms, wind, hail and snow. However, this may be subject to necessary maintenance being carried out on the house.

If a house is damaged to such an extent that it is uninhabitable, most insurers would provide accommodation and security guards, which falls under additional benefits on the policy. However, the limit of cover will differ depending on the insurer. The policy wording and schedule will clearly set this out.

Philippa Wild, head of Vitalitydrive and technical marketing at Discovery Insure, said: “The way in which a homeowner’s insurance policy would cater for damage caused by extreme weather would depend on the specific policy wording. Different insurers may provide different benefits and service offerings for such events. Most insurers would cover weather-related damage, up to the sum insured on the policy schedule, after applying an excess, which is the part of the loss the client must pay. ‘Rent and alternative accommodation’ usually has cover under the buildings and contents sections. This cover is normally limited to an amount shown in the policy. The insurer would have to pay for the period reasonably needed to make the client’s building suitable to live in again.”

According to the OUTsurance website*, it will cover you for “any loss or damage that’s been caused by fire, acts of nature, subsidence or explosion.” Furthermore, it stated: “We’ll even arrange temporary accommodation if a claimable incident has left your home uninhabitable.”

Momentum Short term Insurance also covers you for damage to the structure of your house. “Your property is covered against damage - during acts of nature, bursting of geysers and water pipes, theft and power surges, fire, explosion, impact and accidental breakage. Your property is insured for its full replacement value - whether you're rebuilding, repairing or renovating your property.”

According to the Momentum website, it will pay for temporary accommodation if you need somewhere to stay following a claim.

Who is responsible for managing repairs?

Wild emphasised that as soon as such an event happens, it is important for a policyholder to contact their insurer, who will explain their process. “This process should include how to arrange alternative accommodation and how the insurer will appoint service providers to repair the damage. If the event caused a total loss and the house needs rebuilding, the insurer may rebuild the house or pay a cash settlement, as their policy wording governs (see below for more).”

Upon taking out home owner’s insurance cover, Stevens pointed out that home assistance is usually included in the insurance product.

“This is normally a 24 hour help line which they can contact to send the right people out to them. However, it happens from time to time that damage caused by a storm is during a time period where the offices of the insurance company are closed. In these cases, it is best to take photos of the damage. If the client repairs the damage from their own pocket to prevent further damage, the proof of payment must be kept and once the offices of the insurance company open, they should forward all relevant documentation onto the insurer. This is normally a damage report, the invoice and the photos taken,” explained Stevens.

However, if the damage cannot be repaired immediately, the normal claims procedures must be followed. The general terms and conditions of the insurance policy will clearly set out what you should do.

The excess payable by you (i.e. the homeowner) would be defined in the policy schedule. This will differ from one insurance company to the next.

The loss of a home

In the event that the house is deemed a total loss, Stevens noted that debris will be removed and the claim will proceed to rebuild the home. “This is why it is important that clients understand the average clause under the building section of their insurance policy, as well as under their contents section.”

With regards to rebuilding the house, the cost is based on current prices. It is important to remember that a plumber will be needed, as well as a host of other experts, such as an architect, and an electrician. These are all costs that need to be considered when rebuilding a home.

“It is best to get a professional evaluator to evaluate your home. Not for what you can resell the home for, but for what it will cost to rebuild the home. In an event where the home is a total loss, for example, a flood. The contents will be lost as well. Therefore it is important to calculate the replacement cost of all contents in such an event. Again, look at what it will cost you if you need to buy items new and not what you originally paid for the item,” added Stevens.

When determining how much to insure your home for, things such as outer buildings, paving, walls and swimming pools must also be taken into consideration. If you are underinsured for either your building or contents, you will be liable for paying the difference from your own pocket. “The calculation of the average clause is normally very clear in the policy wording and it is highly recommended that time is taken to understand this clause,” stressed Stevens.

Protecting your home

Stevens highlighted that it is important that you protect your home just as you would if you had no insurance. “Maintenance is huge problem and many claims are repudiated due to the fact that the client does not do the required maintenance on his home as he should.”

Keep emergency contact details at hand. This includes the likes of the fire service, as the faster they respond, the less damage your property may incur. You should also have proof of ownership for all your belongings, as well as an inventory and photographs of everything.

When choosing your insurance cover, Stevens advised speaking to a specialist in short term insurance that can guide and help you make the most informed decision. Also keep in mind that the cheaper the policy, the less cover you may be receiving, or the higher the excess you may have to pay.

“Do not claim for small things that you can carry on your own. Insurance is for huge financial losses and if you claim for every little thing, it will increase your loss ratio. This in turn will increase your monthly premiums. If you had too many claims over a certain period of time, an insurer can give you notice of cancelation as they will no longer accept your risk and other insurers are going to be reluctant to take you on as a risk,” added Stevens.

*OUTsurance was unable to respond to questions at the time of publication.

 Handy tip: Do you need home insurance? You can apply on Justmoney.