Discovery Insure Limited v Masindi

The respondent insured his dwelling and contents with Discovery Insure under a Discovery Insure Plan. Following storm damage on 10 November 2016, he submitted a single claim comprising two components: repairs to the dwelling and contents (genuine) and emergency accommodation (fraudulent). Discovery paid a total of R1 594 980.12 in settlement of the claim. After discovering that the emergency accommodation component was fraudulent, Discovery retrospectively cancelled the policy in terms of clauses 5.13 and 5.5 and sought repayment of the full amount paid, including the genuine portion. The High Court held that Discovery was entitled only to repayment of the fraudulent portion. Discovery appealed.

The appeal was upheld with costs. The High Court’s order was set aside and substituted with an order granting judgment for Discovery against the respondent for payment of R1 594 980.12 plus interest at 10.25% per annum from 8 June 2017 to date of final payment.

The judgment clarifies South African insurance law by confirming that where policy wording permits retrospective cancellation and forfeiture, a partly fraudulent claim arising from a single incident can result in forfeiture of the entire claim, including repayment of genuine amounts already paid. It strengthens insurers’ contractual protections against fraud and distinguishes earlier authority on accrued rights and forfeiture clauses.