Final Ruling Against Old Mutual Insure – Household Contents – Theft Claim Rejected by Insurer

The complainant was moving to another residence in another province and hired a moving company (“the company”) to transport her household contents. The complainant said that many of her items, which were of value, including sentimental value, were not delivered to her and she submitted a claim to her insurer for these
items.

When the complainant lodged the claim with the insurer, the following description of the loss was noted:

“Client moved to another town, but the furniture removal company lost and broke some of the items. They delivered the goods and after the client notified them that not all were delivered, they found some of the items.”

The insurer rejected the claim on the basis that the loss was not caused by an insured peril. The following clause of the policy was quoted by the insurer in its rejection letter:

“4. CONTENTS SECTION

4.5 Extended covers that form part of the limit of compensation

4.5.2 While moving to a new home (if the type of insurance is Full cover) We cover your contents against loss or damage caused by theft, fire, collision or overturning of the transporting vehicle while you are permanently moving to a new home or while furniture is moved to your private home. This cover is subject to the condition that the move must be undertaken by professional movers.“

When the insurer responded to the complaint at our office, it advised that while it remained with its stance as per the rejection letter, it had reconsidered the matter and decided to offer the amount of R10 000, which was the limit of indemnity under the All-Risks section the policy, to settle the claim.

The complainant rejected the offer as she said that this was far less than the value of the items for which she was claiming.

Our office advised the insurer that based on the information provided, it was our view that the peril was a theft, on a balance of probabilities.

The insurer disagreed and maintained that it could not make any further offer as the loss was not a theft, but it was one of missing items. The insurer said that the complainant had not made any allegation of theft and had only described the loss as missing items. This, said the insurer, meant that the items could have been misplaced by the removal company. It stated that it could not pay a claim on the “assumption” that theft was the only cause of the loss.

The complainant informed our office that she had been in constant communication with the removal company from when she realised that the items were not being delivered, and that at a point in time they had stopped communicating with her. The company delivered the first batch of items and then found another lot of items which they delivered to the complainant.

After the second batch was delivered, there was still a significant number of items not delivered, and the company stopped communicating with her. She then advised the company that she was going to open a case of theft and fraud against it, which she did.

The complainant confirmed the above by providing the WhatsApp texts between her and the moving company. The WhatsApp texts confirmed that no definitive answer was provided by the company to the complainant about her items. It seemed that varying undertakings were made to the complainant to either deliver her items or to provide her with feedback on their whereabouts.

The complainant waited 21 days and after not receiving the items or any substantial feedback from the company, she reported a case of theft and fraud to the police, and a police case number was allocated to her case.

The outcome of the case with the police was “unfounded”.

The insurer argued that “unfounded” meant that no evidence of theft had been found. It further argued that the complainant had initially described the incident as “lost items”, and while she had later referred to it as theft, “the intentional deprivation required to trigger theft had not been established.”

The insurer referred to and relied on case law to support its stance that an inference alone was insufficient to prove theft. Further, the insurer requested that our office reconsider the matter on the following basis:

– “The absence of a proven theft
– The SAPS docket closure
– The lack of evidence of intentional deprivation
– The precedents that inference alone is insufficient to establish liability.”

The onus lay with the complainant to prove on a balance of probabilities that a theft had occurred.

We had regard to the definition of theft in South Africa. It is defined as:

“The unlawful appropriation of moveable corporeal property belonging to another with the intent to deprive the owner permanently of the property.”

We then had regard to the elements of the definition of theft which required a factual
enquiry into the merits of the matter.

The evidence was that there were items which were never delivered to the complainant. Once the date on which the items needed to be delivered to the complainant had passed, and no reason was provided for the failure to deliver them, then they had been unlawfully appropriated, as they were now in the possession of the company without the complainant’s permission, especially considering that the complainant had repeatedly requested the return of the items.

While the movable company did not return the items and did not explain the whereabouts of the items, it could be inferred that there was an intention to not return the items. The complainant had opened a case of theft, fraud and malicious damage to property. This demonstrated on a balance of probabilities that she believed that the items were now stolen.

We were also of the view that the fact that the docket was closed with no outcome, or prosecution, did not infer that there had been no theft.

We found, based on all the information at hand that, on a balance of probabilities, the complainant had brought her claim within the cover provided by the policy, and a provisional ruling was issued to this effect and the insurer was requested to settle the claim.

The insurer disagreed with the provisional ruling on the basis that the policy did not cover “unexplained disappearance”. Further, it argued that the complainant initially described the incident as “lost items, and only later reframed the matter as theft. This retrospective recharacterization does not alter the original nature of the loss, which was not accompanied by any direct evidence of criminal intent or unlawful appropriation.”

The insurer made the following further submissions:

“International ombud bodies, including the UK Financial Ombudsman Service and AFCA, have consistently held that closed police investigations without findings of criminal conduct weaken the theft claim and support the insurer’s right to reject
based on policy terms.

Intentional Deprivation Not Proven

The definition of theft under South African law requires: “The unlawful appropriation of moveable corporeal property belonging to another with the intent to deprive the owner permanently of the property.”

While the complainant’s items were not delivered, there is no evidence of intent to deprive. The moving company’s conduct may reflect negligence or logistical failure, but not necessarily theft. The fact that some items were later recovered and others were damaged further supports a non-criminal explanation.

Omission of International Precedent

We respectfully note that the Provisional Ruling does not address or justify the exclusion of relevant international case law and ombud rulings, despite their clear relevance to the interpretation of theft in transit disputes. These rulings are not binding but are highly persuasive, especially where they reinforce the principle that inference alone is insufficient to establish liability under an insurance contract.

We submit that any deviation from these precedents requires an explanation, particularly where the facts and legal principles are materially aligned.”

Regarding the rulings of international ombuds and the case law referred to by the insurer, we responded that each case is dealt with and determined on its own set of facts. As a result, even prior decisions by our office do not form precedent. While a particular approach or principle may apply generally on some matters, each matter is dealt with on its own set of facts, also referred to as its own merits. The enquiry in this complaint is based on the facts and we emphasised that the reliance on case law must be on the basis of the same set of facts.

Whether or not there was a theft is a matter of fact and therefore the facts of each case will determine whether it can be reasonably concluded that there was a theft.

Our decision was based on a balance of probabilities in relation to the facts of the case.

With regard to the element of intent, we found that even if some of the items were returned in a second delivery, it did not prove intent on the part of the moving company to return all the complainant’s items. It also did not remove any intent on its part to deprive the complainant of the other items. We found that this was not simply a failure in terms of the contract to deliver the items.

A period of 4 months had passed since the loss and by the time the complainant had approached our office, the complainant had still not received the balance of her items, despite sending several requests to the company. In any event, the nondelivery may have been the very manner in which the theft had been committed. It did not follow that the non-delivery was not theft; this may have been the modus for the theft.

While we found that the complainant had brought the claim within the ambit of the policy, the onus then shifted to the insurer to prove that it was not theft.

The closure of the theft and fraud docket by the SAPS as “unfounded” did not invalidate the complainant’s claim or serve as proof that it was not theft.

We found that the participant had not presented any evidence to disprove the peril of theft.

A Final Ruling was issued on this basis, and the insurer was requested to accept liability for the theft claim.

The insurer agreed with the Final Ruling and advised that it would liaise directly with
the complainant to quantify and settle the claim.

Thasnim Dawood
Senior Adjudicator and Member of the Escalation Committee
Final Ruling issued on behalf of the Escalation Committee of the Non-life Insurance
Division of NFO

Contact details for the NFO:

Telephone: 0860-800-900