An all-risk insurance policy does not cover theft of valuable items if the terms and conditions, such as being securely locked up when over a specified value, are not adhered to.
This was a hard lesson for a policyholder who had insured his wife's jewellery under an all-risk policy.
The Office of the Ombud for Financial Services Providers adjudicated on the case when the husband took on the adviser, after he had initially secured some money from the insurer.
At stake was the theft of a tennis bracelet and diamond earrings valued at R785,000 on an international flight in September 2022. The policyholder's wife had removed the jewellery and placed it in a bag in the overhead locker. On arriving at their hotel, they discovered the jewellery was missing.
The claim was rejected due to the policy requiring jewellery worth more than R150,000 in value to be stored in a locked safe when not worn.
The insurer made a goodwill payment of R135,000 (R150,000 less R15,000 excess) which was accepted by the policyholder. However, he lodged a complaint against the adviser, arguing that he was never clearly informed about the warranty requiring jewellery to be locked in a safe when not worn.
He said he believed “all-risk” coverage meant coverage under all circumstances.
In response, the respondent referred to policy documents and renewal emails that included the warranty requirement. The office of the ombud said this was also clearly set out in the policy.
The adviser was, however, unable to provide a copy of the record of advice when the policy was taken out, blaming system migrations and the policy's age.
Section 9 of the General Code of Conduct for Authorised Financial Services Providers and Representatives requires that financial services providers keep accurate records of advice given to clients.
The office of the ombud said the record of advice is a crucial document that must be produced when required, especially if advice is disputed.
As the adviser could not do so, the ombud's office recommended a settlement of R50,000 be offered. Both parties accepted the settlement.
“This case highlights the importance of financial advisers maintaining proper records of advice and ensuring clients fully understand policy warranties,” the ombud's office said.
**TimesLIVE**