P K Harikasun v New National Assurance Company Ltd (190/2008) [2013] ZAKZDHC 67 (12 December 2013) Of red herrings, sardines and insurance fraud : something's fishy : recent case law

• Pages: 155-167
• Published date: 01 January 2016
• Author: D. Millard
• DOI: 10.10520/EJC193476
• Date: 01 January 2016

Onlangse regspraak/Recent case law 155

P K Harikasun v New National Assurance

Company Ltd

(190/2008) [2013] ZAKZDHC 67

(12 December 2013)

Of red herrings, sardines and insurance fraud: Something’s fishy

1Introduction

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.

Of particular interest is the inclusion of forfeiture clauses in insurance

contracts. As they stand, these clauses typically stipulate that a

policyholder who was fraudulent regarding a portion of his claim,

regardless of how small that portion was, stands to forfeit his entire claim

against the insurer. As is evident from the case in question, it seems

How to cite: Millard ‘P K Harikasun v New National Assurance Company Ltd (190/2008) [2013] ZAKZDHC 67

(12 December 2013)’ 2016 De Jure 155-167

http://dx.doi.org/10.17159/2225-7160/2016/v49n1a10