It is important that those who are filing for divorce know what the insurance implications will be. (The latest statistics from StatsSA show that the divorce rate in South Africa is up by almost 5% since 2012).
This is according to Marike van Niekerk, Manager: Legal and Compliance at MUA Insurance Acceptances, who says that not only do these couples face the emotional strain of separation, but they are also more likely to suffer complicated short term insurance claim situations or rejections.
“Most short-term insurance claims received shortly following a divorce are incredibly complicated and often become difficult due to emotions being quite intense during this time. There are a number of steps divorced couples can take to ensure their insurance needs do not become another emotional hurdle in their separation.”
During the separation phase, before the divorce is finalised, insurance needs often fall to the bottom of the priority list, placing the separated couple at an increased risk of insurance claim rejections or underinsurance, says van Niekerk.
“This can easily occur when one of the spouses moves out of the home and fails to inform the insurance provider of the new risk address. Some divorces can take years to finalise, this time should be used to sort out issues such as who owns what and ensure it is properly insured.”
Following a divorce or separation each person should have their own separate insurance policy drawn up, says van Niekerk. “Most claims problems arise when both persons have remained under the same insurance policy. This presents a big problem should one spouse submit claims that are not 100% legitimate, which (intentionally or not) damages the other spouse’s claim record.”
However, the clarification of who owns which items must be clearly indicated in the divorce settlement to make the process of drawing up the policy easier, she says. “This is often where underinsurance or no cover for certain items come into play, when one of the spouses has forgotten to include an item in their own policy because they thought it was covered by the other spouse’s policy.”
Van Niekerk says there are a number of reasons why it is important to have separate policies. “Firstly, if there is still only one policy, a spouse cannot claim for items taken unlawfully. Should one of the spouses come into the home and take jewellery out of the safe that is considered to belong to them, the other spouse cannot claim for stolen jewellery when it is under the same policy, unless criminal charges are laid against that person.”
Another problem with having the policy under one name is that emotion often results in the other spouse not caring about the possessions and resultant insurance endorsements, placing the policy holder at risk of claim rejections, she says. “For example, should the policy stipulate that other people are not allowed to drive the car, out of animosity the spouse may let other people drive the car and should an accident occur the claim could very well be rejected.”
Van Niekerk says even if one spouse is still responsible for paying for the policy, there should still be separate policies. “In fact it is better if the policy holder takes full responsibility for the payment, even if they are reimbursed through alimony, because an unpaid policy can also result in major problems when it comes to filing an insurance claim.”
It is advisable to seek the assistance of an insurance broker who can look after the policyholder’s interests, especially for those who are not well versed in handling their financial affairs, says van Niekerk. “However, each person should have their own broker as it ensures a cleaner separation.”
It is also important that the owner of the items is in possession of the valuation certificates for claims purposes. “We often have a case where the other spouse refuses to give the valuation certificates when it comes time to claim. As a result, it is important that the insured gets all supporting valuations certificates for items such as jewellery or collectables. They could have the items revalued if the other spouse is not forthcoming.”
Often following the breakdown in the relationship and trust of individuals, an ex-spouse will approach the insurance company and inform them about fraudulent claims the other spouse may have submitted during the marriage, says van Niekerk. “There are no limitations in terms of the policy for time elapsed since submitting a claim, so the insurance company is likely to open a criminal case against the individual, which can have serious repercussions. The lesson to be learnt here is to never submit a fraudulent claim, because there is always the chance it will come to light.”