In this judgment, the policyholder unsuccessfully argued that the Prescription Act did not apply because the insurer was confined to the time-bar clause in the policy which provided for a period of prescription from the date of the rejection of the claim and because no rejection was ever issued, the clause could not be invoked.
Action had been instituted more than three years after the date of the date of the loss.
The court held that there was no doubt about the identity of the insurer against whom the claim should be made. Nor was there any uncertainty about the necessary facts of which knowledge by the insured was a pre-condition to articulating a claim. In finding that the insurer’s plea of prescription was good, the court referred to previous authority which held that there was no authority for the proposition that until a claim has been rejected by an insurer the debt had not become due.
The judgment confirms the position that prescription of an insurance claim commences to run as soon as the debt is due. The prescription date applies to insurance contracts as to all other contracts.
It is not incumbent on an insurer to accept or reject a claim on a policy. It is only when court process is served on the insurer in terms of the Prescription Act that it is obliged to defend the claim.
Where an insurer neither accepts nor rejects a claim, the insured must nevertheless institute action for the payment of loss within the three years referred to in the Prescription Act. Or such shorter period where the policy provides for a lesser prescription period.