Knysna fire damage insurance remains a burning issue for some residents

The recent blazes in June this year that devastated Knysna and Plettenberg Bay caused seven deaths and destroyed at least 1 000 properties. In the aftermath, many residents were relieved in the knowledge that their homes and contents – their largest assets – were insured appropriately.

Yet it seems some are left somewhat smoldering and hot under the collar after discovering that their policy was insufficient to cover the costs – they were under-insured. Now they’re taking the legal route. One of Knysna’s prominent attorneys is handling a number of insurance-related cases previously not seen this time last year, involving claims for damages against insurance brokers.

Insurance brokers, as financial advisers, are governed by a code of conduct and more than most operate with integrity and transparency. They do a comprehensive financial needs analysis, ask relevant questions and recommend the most appropriate policies in the best interests of their clients. Yet the attorney explained that some ‘fly-by-night’ brokers can quickly sell you a wonderful idea. The minute you’ve signed the policy, they take their commission and they’re gone.

A case in point involved one Knysna resident whose house burnt down and had to pay a penalty on the final settlement amount, as the premium paid over many years was based on incorrect details in the policy. Another case saw a foreign national with a holiday home face a shortfall to rebuild because the insurance was apparently based on the home’s market value. The attorney added that a financial needs analysis should have been done to take into account the actual cost of rebuilding a home.

It’s understandable that disgruntled under-insured clients are sometimes fast to blame their broker/insurer, but they often fail to assume some responsibility in terms of checking the precise details and adequacy of their policy cover. Thus, the onus is also on the client to take the time to read their policy carefully (and not to forget the fine print) and consult with their insurer on a regular basis. The industry also has mechanisms that provide a safeguard and it is also self-regulated to ensure every insured party is treated fairly. What’s more, the ombudsman is always available as an intermediary to intervene when necessary.

Recently, the Knysna municipality held an insurance open day for owners of affected households and businesses. This was to provide support and assistance with claim queries by engaging directly with insurance companies, the insurance ombudsman and other relevant parties.

This experience, albeit a sad and devastating one, is also a valuable life lesson for all the insured across the country on just how important it is to constantly evaluate your policy and update it if necessary to mitigate as many potential risks and losses as possible.