Johannesburg High Court: Insurers Cannot Reject ZA Claims Over SIM Card

• The National Financial Ombud (NFO) has expressed concern over SIM card-related claims being rejected by insurers.
• Insurers must now demonstrate that policyholders were informed of the SIM card requirement before taking out the policy.
• Cellphone insurance policies can be sold as standalone cover or as part of a household contents policy, with different requirements for each type.

To reject a claim on those grounds, they must also show the policyholder was informed of the requirement before the policy was taken out and that the handset was not being used with the specified SIM card.

The National Financial Ombud (NFO) has expressed concern over an increasing number of claims being rejected by insurers due to SIM card-related issues. According to Hannes Bester, adjudication manager at the NFO's Non-life Insurance Division, about 4% of the total cases finalized last year were related to cellphone insurance claims. The issue often arises when policyholders are not informed of the requirement to use a specified SIM card before taking out the policy.

To reject a claim on SIM card grounds, insurers must now also demonstrate that the policyholder was aware of this condition at the time of purchasing the policy. This is in line with the RICA registration requirements and ensures that consumers are not unfairly penalized for not meeting these conditions. Edite Teixeira-McKinon, lead ombud of the Non-life Insurance Division, emphasizes that insurers cannot rely solely on the presence or absence of a registered SIM card to reject claims.

Cellphone insurance policies can be sold as standalone cover or as part of a household contents policy. Standalone cover typically requires the handset to be used with a specified SIM card, while household contents policies work differently and may require cellphones to be listed under the portable possessions or 'all risks' section. Insurers like Vodacom clearly stipulate in their terms and conditions that cover is linked to the SIM being active in that device.

Lawyers advising clients on cellphone insurance policies should be aware of these changes, as insurers can no longer rely solely on the condition that a registered SIM card was in the device to reject claims. This means that policyholders must be informed of this requirement before taking out the policy, and insurers must demonstrate that they have done so. Consumers should also be aware of their rights and the conditions under which their policies are sold.

Lawyers advising clients on cellphone insurance policies in South Africa should be aware that insurers can no longer rely solely on the condition that a registered SIM card was in the device to reject claims, and must also show that the policyholder was informed of this requirement before taking out the policy.

Source: Original reporting via Briefly