Insurance risks and your responsibility

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Keep your insurance cover intact by reporting material changes in risk to your insurer, advises Helderberg Insurance Brokers (HiB).

To ensure that your insurance cover is valid at all times, you must inform your insurer when your level of risk changes. In fact, the insurance company is entitled to declare your entire policy as invalid if you:

  • do not provide them with all the details affecting your risk, or
  • misrepresent or withhold any details that affect your risk.

Your risk may change from time to time, depending on circumstances at your home or relating to your vehicle. However, according to Helderberg Insurance Brokers (HiB) director Johan Potgieter, as soon as there is a material change in risk, you are obliged to inform your insurer.

What is a material change in risk?

Any change in your risk that influences the terms on which the insurance company entered into the policy with you is regarded as a material change in risk.

Material changes

Santam provides the following examples which DO constitute a material change in risk:

  • If you convert your insured passenger vehicle into a racing vehicle then the risk associated with the vehicle becomes materially higher. If you were to insure a racing vehicle from the outset, you would pay more than in the case of a passenger vehicle. Another example would be if your vehicle is insured for private use and you start to use the vehicle for business purposes. You need to declare this fact to the insurer and your cover will be adjusted to business use at a higher premium.
  • If you change or remove any of the security features at your home (e.g. burglar bars, boundary walls, alarm systems), your level of risk increases materially and you must inform your insurer.
  • Alterations to your home which affect the external structure e.g. roof tiles, window frames, doors and building alterations / additions and major internal renovations that necessitate you temporarily having to move out, represent a material increase in risk as they compromise security or increase the likelihood of storm, hail or flood damage.
  • If you decide to start a home-based business or move your business's office to your private residence, the risk changes from a residential risk to a commercial risk and this is likely to nullify your insurance cover.

Non-material changes

The following examples DO NOT represent a material change in risk:

  • Alterations or maintenance work inside the house, such as indoor tiling, plumbing or painting on a scale where you do not have to move out whilst such work is taking place, is not regarded as having a material influence on your risk.
  • Placing your house on show in the presence of an estate agent does increase the risk level, as strangers will be walking through your house, however this risk is not regarded as material since it is temporary and does not influence the terms of the insurance policy.

Although non-material changes do not have to be reported to your insurer, it's important to remember that the onus always rests on you, the insured, to take whatever precautions you can to minimise risk.

What happens when I inform my insurer of a change in risk?

Should there have been any material change in the risk, the insurer is likely to amend the cover and premium from the date of the change. However, if you fail to inform your insurer of any material change in the risk, they are entitled to void the policy or reject any claim that occurred after the change in the risk.

Not sure whether your risk has changed materially?

Sometimes changes in risk can be difficult to gauge. If you're unsure of how your risk has changed, contact Helderberg Insurance Brokers (HiB) for advice and assistance. We'll be able to evaluate your change in risk and also inform the insurer on your behalf, if necessary. We're committed to keeping our clients securely covered at all times.