Friday, 22 February 2019
BREAKING NEWS

Life insurance: What is civil commotion? – Moneyweb.co.za

Following the publicity surrounding Momentum’s initial refusal to pay out a life insurance claim on the basis that the client failed to disclose increased blood sugar levels, I decided to read my life cover policy carefully.

I am a breadwinner with a bond and it is very important to me that my loved ones won’t be left unprotected.

My life cover is with Outsurance.

The following exclusion immediately caught my attention:

‘war, armed international conflict, rebellion, civil commotion, sabotage or any activity associated with the forgoing or the defence, investigation or containment thereof by any security force.’

I can understand that providing life cover during war might be too risky, but what is ‘civil commotion?’ I wondered.

Currently in South Africa the chances of finding oneself in the middle of a service delivery or other protest are quite good wherever one goes.

Data released by Municipal IQ earlier this month shows that a record number of 237 service delivery protests were recorded in 2018. This relates only to protest action against municipalities.

 These protests were spread throughout the country:

Insurance for assets against damage during protest action is easily accessible through state-owned company Sasria (South African Special Risks Association), but is there something similar for life insurance?

On the assumption that such an exclusion could apply to many South Africans, I fired off questions to the Association for Savings and Investment South Africa (Asisa) and Outsurance.

Senior policy advisor Rosemary Lightbody is not aware of any product similar to Sasria coverage for life insurance.

She says there is no blanket approach by life insurers. The exclusion is more often applied to disability than life cover. “Some life insurers apply the exclusions only if the insured person wilfully participates in war, conflict, civil commotion, acts of terrorism, and so on, while others do not apply it at all.

“There is no standard definition of what is meant by ‘civil commotion’ and not all life insurers use the term in their policy documents,” she adds. “In the absence of a standardised definition, you would need to check with individual life insurers whether they apply ‘civil commotion’ as an exclusion and how it is defined.”

Outsurance responds

Outsurance requested more time to respond, and went to a lot of trouble before providing an answer.

The insurer consulted academic text books and case law, and found the following definition of ‘civil commotion’ in General Principles of Insurance Law by Reinecke et al:

 A ‘civil commotion’ is a disturbance of a nature more severe than a riot. The elements of a civil commotion are:

(i) A disturbance serious enough to amount to turbulence or tumult which is on a fairly extensive scale, including the rising of a considerable portion of the people;

(ii) The fact that it is directed at a common purpose of general mischief; and

(iii) That it is accompanied by actual or threatened violence or a tendency to violence.

According to Reinecke, a ‘civil commotion’ is not necessarily levelled at government. It is a disturbance “which has gone beyond mere conduct and has become a state or condition of things”.

The courts have acknowledged that strikes may be peaceful. “However,” adds Outsurance, “where there is violence leading to damage then the element of unlawfulness becomes present and such conduct may constitute a riot or civil commotion (a large scale upheaval).”

Outsurance says it strives to make the wording of its policies clear and simple to understand. “This specific exclusion would not pass that test and after your mail we have done more work to get clarity on it.”

The insurer adds: “This exclusion was a standard feature in the market for many years, but some companies have removed it all together, while others have removed it only for death claims. This was typically driven by reinsurance companies advising most insurers on best practice to manage risk.

“We have done some investigations and are yet to find one example where this was ever used in South Africa. We would also not want to decline a claim for a client that was innocently harmed in a case like this.

“We have discussed this with our re-assurers as well and they are comfortable that we remove this exclusion.

“We will do this for all active policies as well as new policies sold.

“This would take a bit of time to execute, but we can guarantee you we will not use this exclusion on a claim.”

Following Outsurance’s decision, I can relax knowing that my family will be protected if I die during one of the regular protest actions in our country. Whether I ‘wilfully participate’ or not.

Better check that you are covered too.

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Source: https://www.moneyweb.co.za/moneyweb-opinion/life-insurance-what-is-civil-commotion/

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