Why Hiding the Truth From Your Insurer Is a Bad Idea

Last week, the National Financial Ombud Service (NFO) released its annual report for 2025, announcing it had recovered close to half a billion rands (R443 million) for consumers during the year. The Banking and Credit Division had recovered R60.5 million (banking R53 million and credit R7.5 million), the Life Insurance Division almost R300 million and the Non-life Insurance Division almost R83 million.

Two case studies in the report from the Non-Life Insurance Division highlight why it is important to be truthful with your insurer when applying for cover or submitting a claim. They also show that insurers have ways and means of checking up on you to verify the information you have provided.

False information in a claim

Mr A complained to the NFO that his insurer had not only rejected his car insurance claim but had unfairly cancelled his policy, which had resulted in other insurers refusing him cover. It turned out that he had provided false information about the circumstances surrounding the claim.

Mr A’s claim was for accidental damage to his vehicle that occurred on 17 May 2025. He said that, while driving into his garage, he had scraped his car against the building.

The insurer appointed an assessor to determine the cause and extent of the damage and conducted a Navic number plate recognition check for sightings of the insured vehicle before the alleged incident date.

Evidence obtained through Navic sightings revealed that the information submitted by Mr A was incorrect – that he was claiming for damage to his vehicle that had occurred before the date stated on the claim.

When Mr A was confronted about these findings by the insurer, he confirmed that there had, in fact, been two incidents, the first of which had occurred between November and December 2024 and the second in May 2025. He explained that when the initial damage occurred, he had been “too busy and did not have time to deal with any insurance assessments”. He had therefore lodged a claim for the damage from both incidents “for the sake of efficiency”.

On the basis of this information, the insurer cancelled Mr A’s policy.

In his complaint to the NFO, Mr A asked the ombud to compel the insurer to reverse the policy cancellation as he had “subsequently provided accurate information pertaining to the claim”.

The NFO found that the insurer had complied with its obligations in terms of the Policyholder Protection Rules when cancelling the policy and that it had correctly been cancelled in line with the policy’s terms and conditions.

In the NFO annual report, Zwivhuyazwiada Nethanani, a legal intern in the Non-life Insurance Division, notes: “An insurance policy is a contract that is entered into in good faith by both parties. The principle of good faith obligates an insured to always provide true and correct information. The insurer relies on the information provided by the insured to underwrite the policy and to process claims. It is therefore important to always provide true and complete information to the insurer.”

Non-disclosure on application

Mr B complained to the ombud because his home contents claim had been rejected by his insurer and his policy cancelled. He had submitted a claim for damage to his property following a tornado.

During the assessment of the claim, he told the insurer’s assessor that he had previously had a contents policy with another insurer, against which he had submitted a fraudulent claim for a stolen ring. That insurer had rejected the claim and subsequently cancelled his policy on the basis of fraud and dishonesty. 

Mr B’s existing insurer verified this information by obtaining the original cancellation letter from the previous insurer. It rejected his claim and cancelled his policy, according to the policy’s non-disclosure provision.

When Mr B had applied for cover, the insurer’s agent had asked him during the recorded sales call whether he had ever had cover declined, cancelled, or denied or ever had special conditions imposed on any insurance policy. He had answered “no”.

In response to the complaint, the insurer said that Mr B’s previous cancellation for fraud was material to the underwriting of the policy. They would not have accepted the risk had this information been disclosed, irrespective of how long ago the fraud had taken place.

Mr B contested that the initial cancellation had taken place nearly 15 years earlier and he therefore believed it to be irrelevant. He also claimed that the question posed at sales stage was confusing and overly broad. Further, he argued that his current insurer had paid claims in the past.

The NFO found the sales question in the recording to be clear, direct, and unambiguous. The question included the word “ever,” which required disclosure of all past cancellations, regardless of the elapsed time.

The insurer’s payment of earlier, lower-value claims did not affect the matter, as they had not triggered the same level of validation and the fraud-related information had only emerged during the assessment of the current claim.

As a result, the NFO upheld the insurer’s rejection of the claim.

Zuleckha Cara, adjudicator in the Non-life Insurance Division, concludes: “This case reinforces the importance of full transparency when engaging in insurance contracts. Previous insurance history, specifically cancellations relating to fraud, regardless of how long ago they occurred, are generally material to insurers’ underwriting decisions. Full and accurate disclosure remains central to the principle of good faith and maintaining integrity in the insurance system.”