Proving ownership can be an insurance trap

By Andrew Hooker*

If you want to claim for property that is stolen, lost or destroyed, you have to prove that you owned the property. 

That is pretty obvious, but you might be surprised what some insurance companies expect you to do to prove ownership. 

What is often the case is that what an insurance company demands by way of proof of ownership is based more on folk law than on legal or contractual obligations. 

At the extreme end (but not as unusual as you might expect) is the insurance company that demands purchase receipts for incidental purchases made years before the claim.  The end result is that some people, under false threat of the claim being refused, find themselves telling porkies about where they purchased an item or how they paid for it.

The truth is that, in the absence of a specific policy requirement there is no absolute rule that independent proof of ownership is required.  If you purchased something some time ago and simply can’t remember when, where or for how much, then that is the truth and the insurance company has to pay.  And don’t be pressured into making a guess if you truly can’t remember.

A common tactic used by insurance investigators is to ask you to tell them when, where, for how much and by what means you paid for an item. 

Then as soon as you commit to a statement they ask for the documents to prove it. 

So if you say you paid by eft pos, they will ask for bank statements, or if you say you paid by credit card they will ask for credit card accounts.  Even if you say you paid cash, they may ask you for proof of a cash withdrawal.  The key is that they put pressure on you to commit to a version before asking for the proof.  When you can’t find the proof they accuse you of fraud and decline the whole claim.

The key is not to be sacred to say that you can’t remember or don’t have a receipt.  Your word that you owned it, in most circumstances will be enough, in the absence of proof to the contrary. 

Obviously if you say you bought a brand new TV a week ago and can’t remember where or how you paid for it, the insurance company would be justified in being suspicious.  But by and large, don’t crack under pressure to produce proof if you just don’t have it, and if you are guessing about when, where or how paid, say so and make sure that the say “approximately” or “I think” on the form or in the statement. 

It’s not a crime to be unsure, but it is a crime to say something that’s not true.

This situation usually arises in the case of high value items like jewellery or electronic items.  In many cases people succumb to inordinate pressure and produce incorrect evidence or make incorrect statements just because they think they have to.  And when it proves to be wrong the insurance company declines the entire claim.

Know your rights (and the insurance company’s obligations) and you won’t get caught out.

Another common situation is when an insurance company reduces your payout because you obtained something for a bargain or even free. 

What you paid for an item is irrelevant.  It’s what the item is worth (in the case of indemnity cover) or what it will cost to replace (for replacement policies) that matters.

As with many insurance situations, the demands made by insurance companies or their investigators don’t match with your legal obligations.  You have to co-operate, but that only goes as far as giving as much information as you can.  If that falls short of documentary or independent evidence of ownership, that is unlikely to entitle the insurance company to decline.

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*Andrew Hooker is a partner in the North Shore law firm Turner Hopkins and a director of Claims Information Specialists Ltd, running an insurance information web site www.claimsinformationspecialists.co.nz