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Consumer Affairs
Saturday, March 1, 2008
Repudiations continue to escalate

The Ombudsman for Short-Term Insurance says his office has been receiving an increasing number of complaints relating to alarm system warranties in household insurance policies.

Insurers are denying liability on the grounds that no signal was received by the alarm monitoring service at the time the burglary took place, allegedly because the alarm system had not been properly set when vacating the property.
Brian Martin, Ombudsman for Short-Term Insurance notes there are many contributing factors, which cannot guarantee a 100% foolproof alarm system, such as power failures, a poor signal or no signal received, faulty batteries, faulty phone lines or no response from the alarm company.
Unfortunately security companies absolve themselves of any liability, and the Ombudsman warns consumers to bear this in mind when looking for insurance cover.
The office of the Ombudsman applies the law and equity in its determinations and, depending on the facts of each case, might be able to come to the assistance of a consumer who has had his claim rejected due to breach of the alarm warranty.
In particular, difficulty has been experienced by consumers in complying with the requirement that the alarm system be activated whenever the premises are left unattended. This requirement has often led to unintended consequences and has proved to be unworkable, impractical and at times very harsh in its effect, particularly where members of the insured’s family or employees have been responsible for not activating the alarm system, or are incapable of doing so. Some policies stipulate that the premises are treated as unoccupied if only the housekeeper’s rooms are occupied, for instance.
Consumers should rather see the installation of an alarm system as a personal security measure and not as a means to securing a discount on insurance premium. “We are not saying that consumers should not install alarm systems in their homes and businesses, but they should know what they are signing for when they take out an insurance policy.” They should check the clauses in their policy pertaining to the requirements of the alarm system – the so-called ‘alarm warranty’ - and make sure they are not too onerous or impossible to comply with. The cheapest policy is not necessarily always the best, of course.
The office of the Ombudsman for Short-Term Insurance can be reached on 0860 726 890, email info@osti.co.za or www.osti.co.za

Footnote: a detailed discussion of alarm warranties appeared in our cover story of December 2005 (see Insurance Times & Investments Vol 17.5 page 9).

Copyright © Insurance Times and Investments® Vol:21.2 1st March, 2008
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