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Insurance claims explained

Posted by PPS Short-Term Insurance on Feb 18, 2022 7:45:00 AM
PPS Short-Term Insurance

What you need to know about insurance claims and how to ensure yours is a success.

Insurance is often described as a “grudge purchase” as it is a product you know you must buy to protect your belongings, though you would prefer to have spent the money differently. 

But what is insurance and why should it not be regarded as a “grudge purchase”?

In short, insurance is a formal agreement or contract between you (the policyholder) and an insurance provider. Based on this contract, you make stipulated payments to the insurance provider so that if an insured event occurs, the insurance provider will indemnify you in terms of your policy agreement or contract. An insurance claim is your signal to the insurance provider that an event has taken place and that you want to claim for it. The insurance provider then considers this claim in terms of your policy agreement or contract. If the claim is valid, the insurance provider will pay, repair or replace the item or items you are claiming for. Remember not all events claimed are covered. Defined events will be detailed in your insurance contract or policy schedule.

Filing an insurance claim

Before you raise a claim, you must read and understand your insurance policy agreement or contract. You must know what is covered, what is excluded and what the limits are. If you are uncertain whether the event you want to claim for is covered, you can clarify with your insurance provider’s claims department or your broker. The insurance provider will record and process the claim accordingly. 

An insurance claim can be reported via the different channels offered by your insurance provider. It can, for example, be submitted telephonically or by completing an insurance claim form, that is then sent to the claims department. 

It is always advisable that you submit as much detail as possible of the loss, the quantum (value) of the loss and the proof of ownership when submitting your claim. Send any quotation, damage report, photos, videos, statements and the like – together with your claim form – to your insurer as this might save some time.

Insurance claim process

There are several types of insurance products in the market (life, home, car, business, health, etc.), and each of them will have a slightly different insurance claim process according to the product and insurer. Generally, however, they all follow a very similar process. Here is what you can expect:

  • When an insured event occurs, you must notify your insurer immediately or as soon as possible. This is what the industry calls submitting a claim.
  • The insurance provider will require you to provide them with the full incident description. Depending on the insurer, this will either be by phone or claims form, the insurer’s website, its mobile application or by submitting it to their office. 
  • The insurance provider will request all relevant documentation, damage reports, photos, videos, statements, proof of ownership, quotations, etc. The claims consultant will guide you on what they need to process your claim.
  • The insurance provider will determine the process flow of the claim. The insurer may appoint a damage assessor, claims verifier, relevant specialist or service provider as part of the process. Each type of claim will be different. However, the insurance provider or claims consultant will advise you on the way forward.
  • If the claim is covered in terms of your policy conditions the claim will be approved.
  • Once the claim is approved, the insurance provider will provide the way of compensation or finalisation of the claim. 
  • If the claim is declined or repudiated, the insurance provider must provide full detail of the reason for rejection in writing to the insured.

Ways that your claim can be finalised (Most insurers apply this practice)

  • Repair
  • Replace
  • Reinstate
  • Cash settlement
  • Issue a voucher

  • Any combination of the above


The insurer authorises or instructs a repairer to repair the damaged item. An example would be when a vehicle is involved in an accident. The insurer will instruct a panel beater to repair the vehicle. Another example could be a fridge that was damaged due to a power surge and needs to be repaired.


This means the insurance provider will replace the item with the exact same item that was noted on the policy. An insurance provider will usually deliver the item to you. If the item model is no longer available, the insurer will replace it with the model that replaced the discontinued one. An example would be when a television is unrepairable, in which case the insurer would deliver the new television to replace the old television.

Cash settlement

This means the insurance provider will pay cash into the insured’s bank account by means of EFT. This will either be to the value you insured it for or the value the insurance provider can replace or repair the item for.  The insurance industry also calls this transaction a Cash in Lieu transaction. 

Issue a voucher 

This means the insurance provider will send the policyholder a voucher to the agreed value which can be redeemed at specified service providers. Some insurance providers will send the policyholder a “cash card” that they can use as a credit card at any desired store. With this type of compensation, the service provider will give the insured the same discount that they usually grant the insurance provider.

Any combination of the above

This means that the insurance provider may combine the above ways to compensate the policyholder e.g. paying the policyholder cash for certain items, repairing some items and replacing others.


The insurance provider will always apply the excess noted on the policy schedule. Excess is the first amount payable. This is the uninsured portion of your loss which is payable by you when you raise a claim. 

Two common types of insurance

The type of insurance claim will determine what type of policy you are covered under and what section to claim from. The two most common types of short-term insurance are business or commercial insurance, and personal lines or domestic insurance.

  • Business insurance – this usually covers all aspects and items related to your business and its activity. The following are some sections or covers that are usually offered under business insurance: fire; buildings combined; office contents; business interruption; accounts receivable; theft, money; glass; fidelity; goods in transit; business all risk; accidental damage; public liability; employers’ liability; extended liability; motor; electronic equipment; machinery breakdown; 
  • Personal lines claims will be for your own items and not related to your business. This will typically include homeowners (building cover), household items (house contents), all risk items (items you will take out of the house) and motor claims.


Factors that have an influence on the finalisation of the claim 

It is very important that a policyholder understands that he/she needs to provide the insurance provider with correct and complete information when taking out a policy as this determines the premium and the terms and conditions relating to the insurance policy. Should any changes happen during the course of the policy, the insured needs to inform the insurance provider so that they can amend the policy accordingly.

Most common reasons why claims are declined or repudiated

Not all claims are accepted by insurance providers. There are various reasons why a claim might be declined or repudiated. Here are some of the most common reasons:

  • Poor maintenance of the property. It is the policyholder’s responsibility to keep the property in an insurable position; policies do not cover gradual deterioration or wear and tear.
  • Failure to report the loss to the insurer and relevant authorities (if applicable) within the specified time frame.
  • Failure to adhere to policy conditions.
  • Intentionally inflating the claim or any fraudulent act.
  • Failure to pay premiums as per the policy requirements.

Insurance claims

Insurance policies are there to protect you against insured events and to put you in the same position you were prior to the incident. 

Insurance providers are there to compensate you in terms of your insurance contract and will not deny a claim if it falls within the ambit of your insurance contract and if all the terms and conditions of the policy have been met.

There are numerous steps you can take if you are not satisfied with your insurance provider’s decision on your claim.

Make sure you know those steps, these will be set out in your policy documents.

Should a policyholder be unhappy with their claim process or rejection of their claim process that can lodge an internal complaint, and if they are still unhappy with the process then they can send a complaint to the Independent Internal Arbitrator and if they are still not satisfied with the process, they are also entitled to lodging a complaint the Ombudsman for Short-Term Insurance (OSTI). 

*  Any information herein is not intended nor does it constitute financial advice


Topics: insurance insights