The following case study is from the Ombudsman’s Briefcase of December 2022. The insured hit a hole-in-one while playing in a golf competition. According to the insured, it is a tradition at the golf club for the player who hits a hole-in-one to buy drinks for all the players who are present at the prize-giving ceremony. The insured spent a total of R1 000 on drinks.
A few days later, the insured lodged a claim with his insurer under the hole-in-one benefit in his policy, which provided cover of up to R4 000.
The policy stated:
“We will also indemnify you for:
The maximum indemnity for each for the following items stated on your schedule:
A hole-in-one/bowling full-house
A hole-in-one or bowling full-house on a recognised golf course or bowling green.”
The insurer accepted the claim and reimbursed the R1 000 expense incurred by the insured.
The insured objected and submitted that, in terms of the policy, he was entitled to the maximum indemnity of R4 000. He said no provision in the policy limited his claim to the actual expense he had incurred.
The insurer submitted that the hole-in-one benefit is indemnity against having to buy a round of drinks. It is not an award for hitting a hole-in-one.
The insurer argued that if it were to settle the claim by paying more than the loss/expense incurred by the insured, this would result in undue enrichment on the part of the insured.
Osti’s verdict
The Ombudsman for Short-term Insurance (Osti) stated that the insurer must place the insured in the position in which he was before the loss/expense that he incurred.
The hole-in-one benefit intends to provide cover on an indemnity basis. Therefore, the insured had to have suffered a loss (having to pay for drinks) to trigger this benefit. The policy does not state that the insured will axiomatically be entitled to the maximum amount in the schedule upon hitting a hole-in-one.
The Osti found that the insured was only entitled to be indemnified for the loss that he had suffered and upheld the insurer’s decision.
