WILL YOUR INSURANCE PAY YOUR FIRE INSURANCE CLAIM IF YOU ARE NEGLIGENT?

Sep 27, 2018

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Fire Insurance

Negligence is a failure to act in a way that a reasonable person would when faced with the same situation and circumstances. In insurance, the policyholder might be negligent, or it might be another party.

Negligence pertains to all types of insurance: home, life, health, and auto. Depending on the level of negligence and the type of damage, your insurance policy might still pay a claim if it occurs because of your negligence. In cases of liability, the insurance company will typically pay for your legal defence, but it may not pay for subsequent damages if you lose. Negligence is a case-by-case assessment, so you should always do whatever seems reasonable to protect your property and that of others.

The South African legal position

Despite conflicting historic decisions, the most recent jurisprudence demonstrates that it would undermine the very purpose of a policy of insurance to interpret the policy condition of ‘reasonable precautions’ as an exclusion of liability for the insured’s negligence. As such, our courts favour a restrictive interpretation of ‘reasonable precautions’ clauses. An insurer must show that an insured acted recklessly – and not merely negligently – to be justified in its repudiation of a claim arising from damages caused by the insured’s own actions.

Importantly, as regards the scope and interpretation of ‘reasonable precautions’ clauses, the evidentiary burden lies with the insurer, to make clear what particular risks it wished to exclude in a contract of insurance. This is a difficult onus to discharge and the wording of the particular exclusion against the backdrop of the contract of insurance as a whole will be decisive. Insurers should therefore err on the side of caution and take care to be specific in detailing the possible exclusions of liability for loss under a policy of insurance, rather than simply relying on a general condition for the right to repudiate in circumstances where it may be shown that an insured acted recklessly.

Your Insurance Might Later Cancel Your Policy

It doesn’t necessarily mean you’re in the clear just because your insurance company pays a claim. Insurers are in the business of managing risks, and they try to choose and retain policyholders who will minimize risk. When someone is clearly negligent or has repeated incidents of claims that could have been prevented, an insurance underwriter might decide to cancel his policy. The policyholder might be forced to go with a high-risk company because no one else will insure him. It invariably means higher premiums, so it’s better to be cautious than risk significant or repeated claims that you might have been able to avoid.

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