Your Insurance Policy Doesn’t Cover Wear and Tear

The function of short-term insurance is to cover you for unexpected loss or damage to your property over which you have no control; it is not to replace possessions that deteriorate or fail because of natural wear and tear or because you have not maintained them properly.

This was a strong message from the non-life insurance division of the National Finance Ombud Scheme (NFO) in its recently published annual report for 2024. The NFO has been in operation for just over a year after the amalgamation of the separate banking, insurance and credit ombud schemes.

The non-life insurance division ended 2024 with 12 806 registered complaints and 11 089 resolved complaints, 6% and 5.5% more respectively than 2023. The division recorded an overturn ratio of 16.5%, in line with the previous year’s ratio of 16%. The overturn ratio indicates the percentage of complaints where the insurer’s decision or approach was overturned by the ombud with additional benefit to the consumer.

The monetary benefit for consumers who approached the division for assistance amounted to R107.4 million in 2024, compared with R102.8 million in 2023.

Complaints about rejected claims

Under home contents and homeowners’ (building) insurance, of the complaints about claims being rejected, a primary reason for rejection was that the policy did not cover gradual deterioration, lack of maintenance, or wear and tear, the report notes.

Kishendren Pillay, adjudicator in the NFO’s non-life insurance division, says such exclusions are commonly included in insurance policies “to limit the [insurer’s] liability for damage arising from natural aging or degradation of assets, or from a failure to maintain those assets according to recommended guidelines.

“While policyholders may not fully recognise the implications of these exclusions at the time of purchasing their policy, they often become a focal point during the claim’s process when damage is determined to stem from these factors,” Pillay says.

Let’s examine these terms a little more closely:

• Wear and tear refers to the gradual deterioration of an asset through regular, expected use over time.

• Gradual deterioration involves the decline of an asset’s condition due to factors such as weather exposure, age, or repeated operation.

• Lack of maintenance is when a policyholder neglects to adhere to a necessary maintenance regime for an asset, which ultimately leads to preventable damage.

Case study: water damage

A policyholder submitted a claim for water damage to his house, asserting that it was caused by a recent storm. The insurer rejected the claim, stating that the damage was due to a lack of maintenance, wear and tear, and gradual deterioration. This was based on an expert report, supported by photographic evidence, detailing damage to the policyholder’s roof. The expert had found that the roof was in poor condition, had unsealed overlaps, rusted sheets, and several holes. These findings led the insurer to conclude that the damage had resulted from factors such as a lack of maintenance and gradual deterioration, rather than from the storm, as claimed by the complainant.

In response to the insurer’s findings, the complainant submitted his own expert report, which concluded that the overlaps on the roof were sealed and that the roof had been properly maintained. Additionally, the report asserted that the damage was caused by an unusually large volume of water that had passed through the property, rather than resulting from a lack of maintenance or gradual deterioration. The complainant subsequently submitted invoices in an attempt to substantiate his assertion that maintenance had been carried out to the roof.

Pillay notes: “In reviewing this matter, our office carefully considered all the evidence on hand. It was noted that the invoices provided by the complainant were dated approximately four years prior to the reported loss. These invoices made no reference to maintenance; instead they focused solely on painting services. Furthermore, neither the complainant nor its appointed expert was able to present sufficient and clear proof that maintenance had been conducted to the roof in question.

“After careful consideration, we concluded that the evidence submitted by the insurer, specifically the expert report accompanied by photographs, was more compelling than the evidence submitted by the complainant, effectively supporting its position regarding the condition of the roof and the cause of the damage. Accordingly, we were unable to support the complaint.”