When Peter walked out of his insurance company with his fire insurance policy in hand, he figured the next time he would see his insurer was when he had to file a claim. Interestingly, that is exactly what happened.
Unfortunately for him, his claim went unsettled. This is because Peter's fire risk had changed substantially since he had initially taken out the policy. Premiums for a domestic package insurance policy for an occupied dwelling differ from those of the same house without occupants. Likewise, premiums for a fire insurance policy for a house with automatic water sprinklers will be lower than those for the same house without fire extinguishing provisions.
Declarations made at the time of purchasing insurance policies and subsequent updates have great bearing on whether claims made will be settled. Thus, if you stated that your house was occupied, and then took a four-month vacation without it being occupied and unattended to, this could lead to a rejection of a claim if the house is broken into should you not have informed your insurer of the absence in advance.
In the same way, if your house had fire extinguishers at the time of a policy renewal, and then these are uninstalled, your risk profile has changed, which raises the need to inform your insurer. Insurers consider a number of actions when informed of changes in an insured risk. These could range from a revision of premiums upwards, a reduction, maintaining the premium at original levels or even a decline of the risk altogether.
While it will take time and a concerted effort to erode the misconception that insurers do not pay claims, it should be appreciated that due diligence is required on the insurers' part when assessing each claim. This is especially so given the number of false declarations made about risk profiles at the time of taking out insurance.
Keeping your insurer updated about changes to the declarations made when purchasing your policy is important. Insurers are looking out for fraudulent claims caused by false declarations; do not give them a reason to include you in those statistics.
The author is a Chartered Insurer and works with the Insurance Regulatory Authority of Uganda.