Legal cover claims and complaints: who to go to

A refused legal cover claim goes first to the insurer's own review, then to the National Financial Ombud Scheme. A complaint about the lawyer who acted for you is a different matter and goes to the Legal Practice Council. Knowing which body handles which problem helps you send each complaint to the right place first time.

Olvian is a lead-referral service, not an insurer, broker or legal adviser. This guide explains the routes, and cannot say whether any claim should be paid.

How does a legal cover claim work?

The steps are set by the policy, and the law does not prescribe them. The Insurance Act classes legal cover as the "legal expense" class of non-life insurance, covering "any legal expenses and costs of litigation". Our guide on what legal cover covers explains that.

What is usually decided by the policy, and is therefore worth asking about in writing before you need it:

• whether you must tell the insurer first, and by when;
• whether the insurer must approve the matter before you instruct a lawyer;
• whether the lawyer is chosen by you or by the insurer;
• how the lawyer is paid and what happens to costs above the limit; and
• what documents the insurer needs.

If a deadline in the underlying dispute is running, such as the 30 days for referring a dismissal to the CCMA, tell the insurer straight away. The deadline does not wait for the insurer's decision.

What must the insurer do once it has my claim?

Rule 17.6 of the Policyholder Protection Rules made under the Short-term Insurance Act, as published in December 2017, sets the minimum steps.

• The insurer must accept, repudiate or dispute a claim, or its amount, "within a reasonable period after receipt of a claim" (Rule 17.6.1). The Rules do not set a number of days for the decision.
• It must tell you in writing within 10 days of deciding (Rule 17.6.2).

The Rules define "repudiate" as any action by which an insurer rejects or refuses to pay a claim or any part of it, for any reason. A legal policy that pays part of a lawyer's account and refuses the rest has therefore repudiated part of the claim.

Legal expense is a non-life class under the Insurance Act, so we have looked at the short-term rules. The policy documents, or the provider, can tell you which Policyholder Protection Rules apply to yours.

What must a refusal notice contain?

In plain language, Rule 17.6.3 requires the notice to tell you:

• the reasons, in enough detail for you to dispute them;
• that you may make representations to the insurer within a period of not less than 90 days after receiving the notice;
• how the insurer's internal claim escalation and review process works;
• your right to complain to the relevant ombud, the contact details, and the time limits and legislation that apply to such a complaint; and
• any time limitation for legal action in the policy, or if there is none, the prescription period under the Prescription Act, 1969.

If someone else decided on the insurer's behalf, such as an administrator, Rule 17.6.4 requires that person to give the notice, name the insurer and say that any recourse must go to the insurer.

How does the internal review work?

Rule 17.5 requires the insurer to have a claims escalation and review process allocated to an impartial, senior functionary.

If you make representations, Rule 17.6.5 requires a written decision within 45 days of the insurer receiving them. If the insurer still refuses, the notice must give reasons and the facts that informed the decision, and repeat the information about the ombud and time limits (Rule 17.6.6).

Your representations should say which part of the decision you dispute, point to the policy wording you rely on, and attach anything new, for example the letter of demand or the date the dispute began. Keep proof of when you sent them.

What time limits apply to taking the insurer to court?

For policies entered into on or after 1 January 2011, Rule 17.6.8 says a time limitation clause for legal action against the insurer may not count the 90-day representation period, and must give at least six months after that period expires. Rule 17.6.9 lets a claimant ask a court to condone late action where there is good cause and the clause is unfair to the claimant.

That is a legal question for a lawyer or legal clinic, not for Olvian.

How do I complain to the ombud?

The National Financial Ombud Scheme says its service is provided at no charge to the complainant, and that it can only look at a complaint after you have first lodged it with your insurer. Its process, as it describes it: you get an acknowledgement letter; the insurer is asked for a written response within 21 working days if you did not already lodge the complaint with it; you may comment on that response; and the scheme may then issue a ruling or make a recommendation.

Send the insurer's name, your policy number, your contact details, a short factual summary and copies of the correspondence. If a representative complains for you, include a written mandate. The scheme's advice is to keep it short and factual.

How do I complain about the lawyer?

A complaint about a lawyer's conduct is separate. The Legal Practice Council regulates the professional conduct of legal practitioners. Its website says any member of the public can lodge a complaint against a legal practitioner, using its complaint form, which can be downloaded for a province or completed online. The form is scanned and uploaded, and it can also be sent to the Council's offices.

The insurer cannot decide a complaint about the lawyer's conduct, and the Council cannot decide whether the insurer should have paid the claim. If both are in question, you may need to make two complaints to two bodies.

What should I keep while a matter is open?

Keep the policy schedule, the date you told the insurer, the insurer's approval or refusal, the lawyer's engagement letter and every account they send. If you speak to anyone by phone, note the date, the name and what was said, and follow up in writing. The 90-day representation period runs from the date you receive a refusal notice, so write that date on it.

What should I ask the provider who calls me?

Olvian does not advise on whether anyone needs legal cover. These are factual questions:

1. Do I have to notify you before I instruct a lawyer, and within what time?
2. Can I choose my lawyer, and how are they paid?
3. Who decides a refused claim on review?
4. Which ombud deals with complaints about this policy?
5. Does the policy contain a time limit for legal action?

Sources

• Policyholder Protection Rules (Short-term Insurance), replacement notice, Government Gazette 41329, 15 December 2017: Rules 17.5 and 17.6. https://www.gov.za/sites/default/files/gcis_document/201712/41329gon1433.pdf
• Insurance Act 18 of 2017, Schedule 2, Table 2, class 9 (legal expense). https://www.gov.za/sites/default/files/gcis_document/201801/41388gon32insuranceact2017.pdf
• National Financial Ombud Scheme, home page and how to complain. https://nfosa.co.za/ and https://nfosa.co.za/how-to-complain/
• Legal Practice Council, how to lodge a complaint. https://lpc.org.za/members-of-the-public/how-to-lodge-a-complaint/

The Rules have been amended since 2017. Check the current text on the Financial Sector Conduct Authority's website before relying on a rule number.