An interesting case from the latest Short-term Ombud briefcase reflects that fairness and equity should be applied in settling a dispute.
Background
Ms. A suffered a burglary at her property, which was let to tenants at the time. The insurer accepted liability for the claim and authorized repairs.
During the course of the repairs, a second burglary occurred, following which the tenant vacated the premises.
A further two burglaries occurred whilst the insurer’s service provider was carrying out the repairs. One of the burglaries occurred whilst the security guard placed at the premises was sleeping.
The time between the first and the last claim took approximately 7 months to be resolved.
The dispute
A dispute arose between the insured and the insurer relating to the costs of hiring a security guard during the period of repairs as well as Ms. A’s loss of rental income.
The insurer‘s contention was that the policy had a limit of R2 500 per claim for security costs. It also contended that the tenant had vacated the premises for safety and security reasons, and not as a result of the premises being uninhabitable as a result of the loss. It asserted that it could therefore not be held responsible for the loss of rental income.
The Ombud’s view was that the policy did provide for a R2 500 limit per claim in relation to security costs. In addition, the policy only provided cover where the insured premises were rendered uninhabitable. Under these particular circumstances, and from a fairness and equity perspective, the Ombudsman held the view that the insurer could not sustain its argument.
The insurer had taken an unreasonable amount of time to resolve the claims and to complete the repairs. Furthermore, it would be unreasonable to expect Ms. A to let the premises in the condition it was in. The premises would have been unattractive to potential tenants and Ms. A would not have been placed back in the position she was in before the loss. In other words, even though the premises may have been habitable in the strict sense of the word, the circumstances would have rendered it incapable of being let to tenants.
The Ombudsman asked the insurer to pay all the costs claimed. The insurer eventually agreed to settle the claim. The Ombud also requested the insurer to pay interest on the claim amount for unreasonably delaying the solution of the matter.
This is yet another example of the practical application of TCF principles.
