P K Harikasun v New National Assurance Company Ltd (190/2008) [2013] ZAKZDHC 67 (12 December 2013)

Abstract

Fraudulent insurance claims may be divided into three broad categories. The first is unfounded or fabricated claims and these are claims for losses that never occurred (Reinecke et al South African Insurance Law (2013) 375-376). Here, the insured fraudulently attempts to obtain a benefit he would not have been entitled to, were it not for his fraud. The second is fraudulently exaggerated claims, which refers to those claims where the insured inflates the value of what was lost. The third category refers to claims that are fully valid but which are accompanied by fraudulent means or devices - this means that the claim is valid but because the insured is of the opinion that the fraud is necessary to render the claim valid, he perpetrates fraud. At common law, the principle is that an insured cannot claim more than he is actually entitled to. Insurance companies often deal with insurance fraud by including fraudulent claims clauses into their contracts. Standard fraud clauses entitle the insurer to repudiate such claims and, in some instances, the insurer may also be entitled to cancel the contract. These clauses confirm the parties' rights and where an insurer has, for instance, compensated a policyholder and it later transpires that the claim was fraudulent, the insurer has the right to recover benefits that were mistakenly paid to the policyholder.