Content requirements and commonly found clauses in insurance contracts
Attorneys are used to looking at the fine print. But what about the normal man on the street that does not speak “Legalese”. Below we discuss the main general form and content requirements for insurance policies and the most commonly found clauses.
Form and content requirements
Insurance contracts are almost invariably in written form however they are not necessarily signed by parties. With the advances in technology, digital signatures or telephonic recordings serve as evidence of agreement.
According to the Policyholder Protection Rules, the policies must be fair to the consumer. This means that the policy must:
- Include an insuring clause which stipulates the insurance benefit that is offered in exchange for the payment of premium.
- Be in plain language.
- Include a premium payment grace period (usually 15 days from the due date).
- Include a cooling off period (usually 31 days from receipt of the policy document).
- Include the necessary disclosures including insurance limits, exclusions, insurer and intermediary contact information, remuneration and commission details, claims details and complaint details.
A provision of a personal lines policy is void if it either:
- Requires the policyholder to undergo a polygraph or similar lie detector test.
- Provides for mandatory arbitration or gives the insurer the right to reject a claim on the basis of non-payment of premium during any grace period (being typically 15 days after the premium due date).
Life policies must not include provisions that:
- Exempt insurers from liability due to the actions of their agents.
- Deprive the policyholder or life insured of any rights they would otherwise be entitled to.
Commonly found clauses
South African insurance policies generally follow the form typical in the UK and similar jurisdictions.
Common clauses include:
- Insuring clauses. Policies must have an insuring clause (to make it an insurance policy) which provides for the obligation of the insurer to provide the insurance benefit on the happening of the peril or defined event in return for the payment of premium.
- Exclusions. Policies typically detail the circumstances in which indemnity will not be provided, despite the occurrence of the peril or stipulated event.
- Extensions. Policies may include optional extensions of cover for an additional premium.
- Warranties. Policies usually contain warranties provided by the insured, which will vary widely depending on the type of insurance provided.
- Premium payments. Policies will provide for the frequency of premium payments and the consequences of non-payment.
- Claim procedures. Policies will detail the process that the insured must follow in submitting a claim for the insurance benefits.
- Complaints procedures. Policies will detail the process that the insured must follow in submitting a complaint to the insurer or the insurance ombud.
- Institution of legal proceedings. Policies will usually limit the period of time in which the insured can institute legal proceedings.
- Governing law and dispute resolution. The governing law is usually South African, with disputes to be adjudicated by the South African courts or by arbitration, if permissible.
- Endorsements. Policies may have endorsements which extend, vary or otherwise limit the insurance cover provided by the policy.
- Riders. Policies may have riders which provide for additional or further policy benefits or value added services.
Need advice on your insurance matter?
If you need assistance with an insurance matter, where a claim has been denied, rejected or repudiated feel free to contact us at Paul du Plessis Attorneys on 012 809 1588 or send an e-mail to firstname.lastname@example.org