The Office of the FAIS Ombud strives to empower consumers to take control of their financial future. Empowerment is only possible through improving one’s knowledge and obtaining more information regarding financial services and the products provided. While registered financial planners possess the
required skills and qualifications to provide advice regarding financial services, one must also seek to empower oneself through knowledge and information.
One of the most important responsibilities of a financial services provider, in terms of the General Code of Conduct for Authorised Financial Services Providers and Representatives (‘General Code of Conduct’), is to place a client in a position to make an informed decision. By empowering yourself with respect to your specific financial circumstances and the solutions available, you, as the client, will be better able to interact with the financial services provider in a meaningful manner that will allow you to be better placed to make that informed decision.
In the spirit of empowerment, this Office would like to highlight what appears to be an often-misunderstood warranty clause regarding jewellery items specified under a personal short-term insurance policy. Clients of short-term insurance policies are often under the impression that declaring specified
jewellery items and insuring them individually under what is commonly referred to as All-Risk Cover will ensure that one will enjoy insurance coverage if anything occurs with the insured items.
To refresh, an All-Risk Benefit is where you specify a valuable item such as jewellery and pay a specific premium based on the item’s value so that you are compensated in the event of loss or damage outside the home. An item insured under an All-Risk Benefit would require that a valuation certificate and proof of ownership be provided. However, valuable items such as jewellery often elicit a warranty that provides for certain requirements to ensure a valid claim. A jewellery warranty would normally depend on the value of the items covered under the policy exceeding a certain value. An example of such a warranty, as per a recent complaint investigated by this Office, would resemble the following:
“It is required, and you warrant that any jewellery with a combined value exceeding R150 000 shall at all times, while not being worn, be kept in a locked safe securely attached to an interior brick or concrete wall or floor of the dwelling or such other place you might be resident at.”
In a complaint being investigated by this Office, the complainant’s wife removed her jewellery and placed it in a bag in the overhead locker during a flight to avoid discomfort whilst sleeping. After arriving home, they discovered the items were missing. The subsequent claim, which was for a value of R785,000.00, was reduced to R150000, and after the deduction of the excess, a net amount of R135000 was paid to the complainant. The claimed amount was reduced due to the warranty term requiring the items to be locked in a safe when they were not being worn. The complainant submitted that he was not warned about this clause by the representative.
Although the Office is still considering the complaint, we want to highlight the matter during this period when many people will be travelling.
Based on published case summaries, the Office noticed that the National Financial Ombudsman Scheme has also dealt with similar matters.
In one matter, the insured was on holiday when he went to the beach with his wife and baby. He placed his bank card, cash, watch and rings in his wife’s bag for safekeeping. The bag was placed in the baby’s pram while they were at the beach. Hours later, they went to a shopping mall, and when they opened the closed area of the pram, the bag was missing. The claim for the loss was rejected as the applicable policy clause stated:
“It is required and you warrant that any insured watch, jewellery item or precious stones worth more than R75 000, shall at all times, whilst not being worn, be kept locked away in a safe permanently attached to the interior of the residence, failing which theft cover shall be limited to that amount for each item and in total.”
In another matter, the insured wore her tennis bracelet to work. While at her desk, she realised that one of the links of the bracelet had broken and that the bracelet might easily fall off. Fearing she might lose the bracelet, she removed it from her wrist, wrapped it in a tissue and placed it in her handbag. During that afternoon, she had to go shopping for medication for one of her children. When she got home and opened her handbag, she realised that the bracelet was missing. Once again, the applicable policy clause stated –
“It is hereby warranted that all jewellery must be secured in an approved safe when not being worn and loss to such jewellery must be consequent on forcible entry to such safe. It is a condition of the policy that jewellery must be checked every 24 months and that a current valuation certificate is provided at the time of loss.”
Clauses like these are commonly found in insurance policies, and we encourage consumers to take note of them. Contact your insurer or your representative if you require any clarification or further information on your specific policy.
Should you believe that you have been financially prejudiced because of the financial service rendered to you with respect to a regulated financial product, please lodge a written complaint directly with the service provider. If the complaint remains unresolved after six weeks, you can visit our Complaints Portal at www.faisombud.co.za and select ‘Lodge Complaint’. Alternatively, you may submit a complaint in writing to info@faisombud.co.za. You can also call our Client Care Centre at (012) 762 5000 or Sharecall at 086 066 3274 for assistance in submitting a complaint.
