Lost and Found: The insurance procedure when something reappears

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We have all been there and experienced that dreaded feeling of knowing that we have lost or misplaced a very expensive item. Hopefully the item is fully insured and then what follows is the arduous task of putting in a claim but what happens when you, on the very rare occasion, find or recover this misplaced item after filing a successful claim for the ‘missing’ piece?

According to San-Mare van Zyl, Head of Insurance Operations at MUA Insurance Acceptances, consumers are often misinformed about the process they need to follow after finding a ‘lost’ item following an insurance claim and therefore need to be aware of their responsibility in the event of an item which has been claimed for reappears.

The company is a leading insurance underwriter of personal lines insurance for the executive motor, classic car and home market with policies catering for the specific insurance needs of high valued vehicles and high net worth individuals and sites jewellery as a good example of items that are very likely to go missing, whether it is at home or while travelling, as they are usually small in size and easy to misplace. Other items that are also prone to disappearance are electronics such as cell phones, laptops, iPads, cameras and luxury handbags.

“If the insured does not inform their insurance provider that they recovered the item, they could face possible legal action. For most cases, if a client receives a settlement from their insurance company for the lost item, the insurance company technically owns the lost item, a concept called subrogation rights,” explains Van Zyl.

It is therefore vital that consumers contact their insurance provider or broker when they recover an item for which their received a pay-out for. Van Zyl advises that the consumer can then follow one of two courses of action; they can pay the money back to the insurer or they can return the item to the insurer.

“Once the consumer has paid the money or returned the item, in most cases their insurance record will be cleared and they will not be penalised for the claim that was submitted, such as annual premium increases on the renewal of their policy or a drop in their claims-free status”.

Should the insurance provider have certain doubts regarding the claim issue, the insured could be interviewed under oath, whereby they could face serious legal action if the claim was fraudulent. “In the event that a client does not inform the insurance provider that a missing item was relocated, the client obtained a benefit of which they are not entitled to, and this action is regarded as insurance fraud,” explains Van Zyl.

Losing an expensive item can be traumatic experience for many consumers, as it often tends to have sentimental or monetary value attached to it. However, the consequences of a failure to let an insurer know of a located item which was lost can be even more severe, and that is a not a risk worth taking.