The following is a case study published in OFS Annual report:
Musang Putih Construction company was involved in a construction project and some construction material was lost due to theft from the site storage. A claim was submitted to the insurer for the loss of the materials. The insurer had repudiated the claim due to non-compliance of Special Conditions Concerning Theft Prevention and Security on Construction Site Warranty.
Our Findings
The policy schedule stated that the coverage is subject to following clauses/warranties/memo/endorsements that included among others:
“2. Special Conditions Concerning Theft Prevention and Security on Construction Site”
However, the full wordings for the above special conditions were not stated anywhere in the policy documents provided by the insurer. The case manager requested the insurer to submit documentary evidence which shows that the above special conditions were clearly stated in the policy documents provided to the insured.
The insurer could not provide any such documentary evidence but contended that the above special conditions were verbally explained to the insured.
We highlighted that all the policy terms and conditions should be clearly stated in an insurance policy contract given to the insured. Based on the above, OFS requested the insurer to review its decision.
Outcome
The insurer reviewed their decision and made an offer which was accepted by the insured.