Home / Insurance  / Is the fox guarding the hen house?

Is the fox guarding the hen house?

Have you ever put in an insurance claim for damage to your home and ended up with a huge quote to do the repairs? This happened to a prominent property player recently, who wishes to remain anonymous – an experience that shook him to the core.


His home’s skylights were damaged in a recent hailstorm so he naturally contacted his insurance company to report the damage. The company sent out a contractor to assess the damage which surprised the property player as an insurance assessor from the insurance company was not dispatched.

The contractor assessed the replacement cost at R225,000, which seemed excessive for some glass and steel, but the experienced property player bit his tongue. The contractor said that the smaller skylight would be covered by the claim but that the larger skylight’s damage was due to wear and tear, and thus not covered by the insurance policy – a policy for which the property player pays R19,200 a year.

“But don’t worry, we will claim for the smaller one and that should go some way to covering the R150,000 replacement cost for the bigger one which you will have to pay for,” said the contractor, following it up with a wink.

A few days later the insurance company confirmed it would only pay for the smaller skylight, at a cost of R75,000. The property player, who has learned patience, simply waited.

“Are you happy to proceed with the R150,000 replacement cost for the bigger skylight and, if so, I will send my subcontractor to measure the bigger and smaller skylights,” the contractor said over the phone.

“I don’t know if I am going ahead but send him anyway so I will know what I am in for,” the cautious property player replied.sky light

The next day a man arrived in a bakkie and introduced himself as the subcontractor; he was there to measure up and cost the replacement of the two skylights. After a cup of tea and a chat the owner asked, “So, what do you think the two skylights will cost to replace?”

Softened up by tea and biscuits the subcontractor replied, “I can do both for R75,000.”

“Would you do it as a private job for me at that price and not for your contractor? I will pay you right now for all the materials and will pay the balance for your labour upon completion of the job,” asked the property player.

“Yes,” replied the surprised subcontractor, “I will start next Monday.”

The experienced property player then contacted his insurance company and asked, “Will you pay me out the R75,000 and I will get my own contractor to do the job?”

“Yes, providing you absolve us of any liability for the work undertaken we will send you the R75,000 today,” the insurance company official replied.

Two days later the original contractor phoned to confirm the go ahead for the R225,000 job and was gently told by the homeowner, “I have found someone to do the entire job, at my risk, for R75,000.”

“Watch out for fly-by-night contractors leaving you with leaky skylights,” was his passing advice.

“Are you then a fly-by-day contractor?” the property player thought about asking, but bit his tongue again.

The real concern for all homeowners is that certain insurance companies are using “selected” contractors to do the costing at way above the real cost and someone is pocketing the difference. In this instance, the difference between R225,000 and R75,000 (R150,000). Whose palms are being greased along the way?

Surely this is like asking the fox to guard the hen house? And if this practice is widespread, all homeowners are paying excessive premiums for their homeowner’s insurance policy. Surely these insurance companies must know that these practices are taking place?


Are there any HomeTimes readers who have experienced something similar?

*The property player is active in the market and his mortgage bond is with his insurance company’s holding company, hence the desire to remain anonymous.


Review overview