In 1979 astronomer Carl Sagan popularised the aphorism “Extraordinary claims require extraordinary evidence”. It was reworded Laplace’s principle, which says that “the weight of evidence for an extraordinary claim must be proportioned to its strangeness” (Gillispie et al., 1999).
The responsibility of proving (or disproving) a fact
Today “burden or onus of proof” is a legal term and means the obligation by law placed upon a person to prove what he or she has already stated. In other words, the significance of this consideration in terms of insurance is, the insured must prove that insurers cover a particular loss event under the insurance policy issued.
In practice, in dealing with an insurance claim, the onus of proof is one of the most critical questions to resolve the claim.
An insured who wants to claim under a policy bears the onus of proving that an insured peril caused the loss.
Saying it is a claim is one thing, but proving it is another!
Onus applied in the event of a claim rejected due to exclusions, exceptions, material non-disclosure, absence of insurable interest and breach of terms.
An insurer may reject a claim because of exclusion, exception, or breach of terms in the policy. Most of the time, the insurer asserts they are not liable because of the exception. The application means the burden to prove the facts fall within the exclusion, exception, or the breach of terms rests on the insurer.
Example 1
To claim theft of your assets, the insurer will usually ask you to provide a police report (or similar document) to verify that the theft event happened during the insured period. It will also outline the circumstances of the loss. The insurance company will ask you to provide evidence that you owned the stolen items and what they were worth. Some insurers are particular about the documentation they will accept as proof of ownership, for example purchase receipts and valuations.
Other insurers may be more flexible and accept other forms of evidence such as photographs, user manuals, repair certificates or statutory declarations. It is best to check with your insurer regarding acceptable proof in the event of a claim.
Example 2
The insured crashes their car on the way home from a late-night work function at 2 am. In submitting the claim to insurers, the policyholder provides proof of the accident by giving insurers a case number obtained from the local police station following the accident.
The case number is all the evidence supporting the insured’s claim. Therefore, the accident is covered under the policy and the insurer will have to treat the claim as valid. But the insurer denies the claim on suspicion that the insured was driving under the influence of alcohol, which is an exclusion under the policy. In such an instance, the insurer will have to prove their suspicion beyond any reasonable doubt.
Example 3
If the insured cannot produce absolute proof, then prima facie evidence is allowable. For instance, if a building is burnt down, there is prima facie evidence of loss by fire, and the insured has discharged his onus of proof.
If the insurer wishes to deny loss by fire, the insured has already been discharged from the onus of proof. The onus shifts onto insurers if they want to deny liability based on alleged arson. Their evidence must be sufficient for submission to the courts. If they cannot produce such evidence, the insured will succeed in the claim.
Suppose the insurer discharges the onus of proof laid upon them by providing CCTV evidence of the arson and witnesses. In that case, it passes back to the insured, who must then prove any exclusions or exceptions applied does not hold good, or it does not apply to the whole loss.
The insured must then prove to what part of the loss the exclusion or exception does not apply. If the policyholder cannot do this, the whole claim will fail. In all claims, the extent of the loss must be proved by the insured.
To claim under a policy, an insured must therefore not only prove suffering a loss (by example, fire) but comply with all the terms and conditions of the insurance agreement.
An exception to “Onus of Proof”
There is a reverse onus of proof in the event of an “Act of God’’ occurrence, riot, war or nuclear disaster exclusions, and the other exceptions cover. If loss or damage occurs during the conditions set out in the exceptions, the insurer needs to do no more than prove the existence of the abnormal conditions. The burden of proof then shifts to the insured, who must then establish the loss did not arise from the excluded events.
The position can arise where the insured’s “riot-type” claim is rejected by his “ordinary” insurer but the insured cannot prove a specific “act” or occurrence of the kind covered by the SASRIA Certificate.
Once it is established that the claim is likely to be valid and that the insurer will pay it, the final considerations required are to verify whether the claim is subject to the principles of insurance, namely average, subrogation, contribution, and betterment.
