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Insurance law amid ongoing flooding

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Published Date: February 22, 2023


South Africa has been experiencing a heavy downfall for a couple of weeks now, which has resulted in heavy flooding in most provinces. It is for this reason that the President of the country has declared a National State of Disaster. The ongoing flooding has caused serious damage to people’s properties, cars, house contents, etc. It has also resulted in business interruption, loss of income, potential loss of jobs and employment, serious bodily injuries, and death. This demonstrates the far-reaching consequences of flooding. All these possibilities are risks that can be and usually are insured against. This, in turn, necessitates a discussion as to the relevant insurance provisions that may be triggered by the flooding.

Insurance policies:

It goes without saying that to claim from an insurer, a valid insurance policy must be in place. Non-policyholders may however still benefit from the provisions of the Fund Raising Act 107 of 1978. In terms of this Act, relief is available to all communities suffering due to a National State of Disaster. Importantly though, unlike private insurance cover, communities have little, if any, say on the benefits which they can receive. It is for this reason that private insurance remains extremely useful.

There are various insurance provisions that may be triggered as a result of flooding including, inter alia, the following:

  • Accidental damage/building/structural cover – the floods may damage or destroy buildings, cause structural damage, and thus trigger such a provision.
  • Home and house contents cover.
  • Fire/water/flooding cover – interestingly, most insurance policies do not have a specified section to cover “flooding”. Most insurance policies cover this risk under the “fire” section of the policy. This makes it mandatory on the part of the insureds to look closely at the “fire section” clause. If necessary, have their brokers and/or lawyers involved in order to ensure the extent of cover provided under the “fire” section. It ordinarily involves a lot of cross-referencing with specific exclusions which can make it difficult for a lay person to understand whether there is cover for flooding in the policy.
  • Business interruption / loss of income cover – many businesses have been unable to operate due to heavy rains. Many of them should be able to claim for business interruption.
  • Personal injury and death – long term insurance policies may be activated. Last year’s floods took many lives which increased the number of claims for long term insurance.

The above-mentioned insurance provisions are by no means exhaustive. These are, nevertheless, the most prominent.

What should the insureds do:

It is true that there is no guaranteed way of ensuring that an insurer pays out in the event an insured risk eventuates. At best, an insured may take steps to maximise the chances of claiming successfully. Herewith are some of the steps to take:

  • Reporting and submitting a claim timeously. An insured can do this through a broker or directly with their insurer. It is, however, advisable to make use of the broker’s services where there is one.
  • Complying with the insurer’s reasonable requests as soon as possible and to the best possible degree.
  • Keeping all correspondence – relating to the insurer and/or the broker.
  • Keeping a record of telephone conversations with insurers/brokers.
  • Constantly engaging the broker and/or legal representatives. In most cases, it is possible to gauge what direction the insurer wants to take. As such, it is important to ensure that you, as the insured, anticipate and make contact with your legal representatives as soon as you believe there may be a rejection.

Where an insured is dissatisfied with an insurance rejection, it would be wise to obtain a legal opinion and, and consider the possible avenues to challenge the rejection. In some instances, insurers do pay out but an insured may be dissatisfied with the amount of the pay out. Once more, an insured would be well within his/her rights to challenge this.

Mtho Maphumulo
Senior Associate | Litigation Attorney

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