Abstract
Insurance fraud is prevalent in all spheres of the insurance industry; however, motor vehicle insurance sees a major increase in fraudulent insurance claims. It is for this reason that insurers need mechanisms in place to protect themselves from fraudulent claims by an insured. One of the more common preventative measures that insurers are using to protect themselves is by inserting forfeiture clauses in the insurance contract itself. These clauses aim to protect the insurer against any type of fraudulent claim by the insured. These clauses do, however, also bring a host of issues to the fore; including the fairness of these clauses as against the insured. These clauses do tend to be one-sided and therefore, a proper evaluation of these clauses is necessary to understand the application and effect these clauses can have on both the parties to an insurance contract.
Highlights
Due to the fact that the public transport system in South Africa is underdeveloped, many South Africans have to rely on the use of motor vehicles
This paper argues that the current state of affairs in South African law relating to motor vehicle fraud is in need of urgent reform
Using forfeiture clauses as a preventative measure against insurance fraud seems to be an effective mechanism for insurers
Summary
Insurance fraud is prevalent in all spheres of the insurance industry; motor vehicle insurance sees a major increase in fraudulent insurance claims. It is for this reason that insurers need mechanisms in place to protect themselves from fraudulent claims by an insured. One of the more common preventative measures that insurers are using to protect themselves is by inserting forfeiture clauses in the insurance contract itself These clauses aim to protect the insurer against any type of fraudulent claim by the insured. These clauses do, bring a host of issues to the fore; including the fairness of these clauses as against the insured. These clauses do tend to be one-sided and a proper evaluation of these clauses is necessary to understand the application and effect these clauses can have on both the parties to an insurance contract
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