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Average in Motor Insurance

The Insured’s 1992 Toyota Conquest was insured for R26,800.

On 3rd June 2002, and at approximately 07h25 the vehicle was extensively damaged whilst the Insured was on his way to drop his son at school. The cost of repairs amounted to R28,953.39. The Insured decided that it would be more economical for him to have his vehicle repaired. The Insurer however, gave the Insured two options -

Source: Ombudsman Newsletter : 02/03

Written notification of claim within 30 days

The Insured’s motorbike was damaged in a collision on Thursday, 20th June 2002. The following day, i.e. on Friday, 21st June, he gave telephonic details of the collision to his Broker which telefaxed to him on Monday 24th June, claim forms. The motorbike was taken on a trailer to Linex Yamaha during that week, and he was only able to collect the quotation from Linex Yamaha the following Tuesday, i.e. 2nd July 2002. On Friday, 12th July 2002, his 79 year old father fell and was placed in Universitas Hospital, Centurion. The Insured being a single parent and between his responsibilities with his father, son and work, only managed to get to Linden Police Station on Tuesday, 23rd July 2002, to get them to stamp and sign off the motor accident claim form. On Thursday, 25th July 2002, he faxed the claim form together with the quotation to the Insurance Broker. The Insurer rejected liability because the claim was not reported in writing within thirty days of the event. The Insured was five days late within giving written advices to the Insurer of the claim.

In view of the strict conditions of the Policy, requiring written notification of the claim within thirty days of the event, the Ombudsman could not make a ruling against the Insurer.

Source: Ombudsman Newsletter : 02/03

Consequential Loss

The Insured was involved in a collision on 12th October 2001. Damage was done to the left and front sides of his vehicle as well as to the engine. The Insured was concerned about mechanical damage to the engine, but the Insurer insisted in having the repairs done at a workshop of its choice and an Assessor of its choice to verify the work.

He collected his vehicle on 16th November 2001 and whilst driving the vehicle from the panel beaters to his house, the vehicle started to shudder and he then noticed a red warning light, which had come on. He had first thought that it was the handbrake light. Because of the fact that it was raining heavily he decided to stop at the first garage, but before he could get to this turn-off, smoke came out of the engine hood. He then stopped.

The Insurer refused to pay for additional repairs on the basis that the Policy does not compensate for consequential loss. The argument was also advanced that the cracked cylinder head could have been avoided had the Insured stopped when the warning light came on.  

After one letter to the Insurer it tendered to pay two-thirds of the repair costs.   The repair costs amounted to R50,719.49.   The Insurer tendered to pay R36,032.87.

Source: Ombudsman Newsletter : 02/03

Non-payment of premium

On 6 April 2002, a husband and wife jointly purchased a BMW 316 and signed a debit order. Two days later, on 8 April, the insurer cancelled the insurance pursuant to a telephone conversation between a clerk and the insured. On 26 April the vehicle was taken for a Netstar fitment. A collision occurred on 2 June and the insu­rer rejected liability because no pre­miums had been paid subsequent to the first installment.

It was pointed out to the insurer that the cancellation of the policy on 8 April was more than likely a bureaucratic bungle on the part of the insurer, because the probabilities indicated that it was most unlikely that a person would buy a new car and two days later cancel the insurance, and yet two weeks later incur the expense of a Netstar fitment. Furthermore, the insured’s, at all material times, had sufficient funds in their bank account to pay the premium, if debited. The insurer agreed to admit the claim.

Source: Ombudsman Newsletter : 02/03

Consequential Loss

At 02h00 on 2nd September 2001 an Attorney’s ex-wife was traveling alone in Lois Street, Menlyn, Pretoria, when she was blinded by the bright lights of an approaching vehicle. At too late a stage she saw a speed bump and drove over it faster than she would otherwise have done. Nothing seemed wrong with the car, and she drove on. Approximately 1,5 Kms. further a warning light came on and she then drove to the nearest garage, which was about 1 Km. further on. It was discovered that there was serious engine damage due to the loss of oil.

Reason advanced for rejection

The Insurer rejected the claim as the Policy contained an exclusion that there is no liability for Consequential Loss.

Ombudsman’s response

It was pointed out that the damage to the vehicle’s engine was not consequential and that the proximate cause of the damage was an insured event. Under threat of a ruling, the Insurer admitted the Insured’s claim.

Source: Ombudsman Newsletter : 03/03

Insurable interest

The insured was a life insurance bro­ker and operated his business through a CC in which he had a 90% interest. His wife owned 5% and his domestic help owned the remaining 5%. During May 2001 his CC acquired a new BMW 325 at a cost of R233 000. He instructed his short-term broker to insure it comprehensively in his personal name for private and pro­fessional use. Three months later, the vehi­cle was involved in an accident and da­maged beyond economical repair. The insurer rejected liability on two grounds:

The Ombudsman referred the in­surer to the decision Lynco Plant Hire & Sales BK vs Univem Versekerings Makelaars BK 2002 (5) SALR 85 (T), and to articles by JR Midgley ‘Spouses and Shareholders — Insurably Interested?’ (1985) 102 SALJ 466 and JP van Niekerk — Juta’s Insurance Law Bulletin, Volume 5 No. 3 202, Page 92. It was pointed out that the South African law regarding insurable interest require the insured to suffer a loss of an appreciable commercial value if the insured item were damaged, destroyed or lost. Clearly the insured as the virtual sole member of the CC would suffer a substantial commercial loss if the vehicle owned by the CC were destroyed.

The insurer abandoned the second rejection reason as it was not mate­rial to the loss. Under threat of a ruling the insurer ultimately admitted the claim.

Source: Ombudsman Newsletter : 04/03

Failure to report accident to police within 24 hours

It was not a happy Friday 13th for the insured, a chef at a hotel in Saxonwold. At 20:00 he was on his way home along Jan Smuts Avenue, Johannesburg, and on one of the many turns he noticed a group of pedestrians crossing the road. While avoiding them, he overcorrected and collided with a light pole. He lost consciousness and woke up the follow­ing day in the Milpark Hospital. He was discharged on Saturday at 15:30 and his wife took him home, gave him medica­tion and put him to bed. He spent the whole of the Sunday in bed, and although still shaky and in a lot of pain, reported the accident to the Randburg Police Station on Monday. He lodged a claim for the repairs of his car with the insurer, which rejected the claim on the ground that he had failed to report the collision to the SA Police within 24 hours. The insurer alleged that it was not given the opportunity to verify and confirm the incident with the Police and there was also no blood test conducted to confirm the possible use of alcohol.  As a result of the Ombudsman’s inter­vention, the insurer admitted the claim and paid out to the insured R44 095,17, being the pre-accident value of his vehicle.

Source: Ombudsman Newsletter : 04/03

Incorrect reason to reject

The insured was resident in Strubens Valley and according to the policy his Opel Corsa was kept at this address. On 17 June 2002 in Honeydew, his car was damaged beyond economical repair. When he completed his claim form, he wrote on the claim form his new address in Honeydew where he was intending to stay. The insurer promptly repudiated liability because the insured had sup­posedly changed his address without in­forming the insurer. The Ombudsman pointed out to the insurer that at the time of the collision, the insured had not physically changed his address and furthermore, and in any event, because the vehicle was involved in a collision, the change in his address was of no legal significance. The insurer then admitted the claim.

Source: Ombudsman Newsletter : 04/03

Insurer rejected claim because of failure to have vehicle inspected

The insured purchased a vehicle on 12 June 2002, which was damaged in a collision six months later. His insurer rejected liability on the ground that the insured had not taken his vehicle for inspection and that he had been driving the vehicle under the influence of alcohol.

The Ombudsman pointed out to the insurer that the inspection requirement is usually done to ensure that the vehicle is not a ‘paper’ vehicle, but in this case there is clear proof that the vehicle, at all times, existed and was in good condi­tion. With regard to the allegation of driving under the influence of alcohol, the Ombudsman highlighted that the onus will rest upon the insurer to prove on a balance of probabilities that this was the case. In the absence of clear proof, the insurer will not be able to dis­charge the onus resting upon it and gave the insured the benefit of the doubt.

The insurer then admitted the claim.

Source: Ombudsman Newsletter : 01/04

Betterment

The insured’s son, who was the named driver of her vehicle, swerved to avoid a dog in the road and the car mounted the pavement.

Unbeknown to the driver, damage to the sump occurred and it leaked oil. Prior to the aforesaid accident, the car had completed some 131 771 kin, and the engine was repaired at the cost of R11 462,29. The insurer applied a 35% betterment amounting to R4 011,80 “in view of the fact that the engine of the vehicle has been renewed”. The expected life span of the particular engine is in the region of 250 000 km and the insurer calculated that the vehicle had completed 53% of its expected life span.

The insurer conceded that the reconditioned engine did not have an influence on the market value of the vehicle.

The Ombudsman agreed with the insurer that the insured cannot make a profit out of her loss. A factor which is of overriding importance to the Ombuds­man is that the vehicle was the insured item, i.e. not the engine. Inasmuch as its market value had not been increased as a result of repairs to the engine, the Ombudsman called upon the insurer to forego the claim in respect of better­ment. It was persuaded to do this and paid to the insured R4 200, i.e. almost R200 above the betterment initially claimed.

Source: Ombudsman Newsletter : 01/04

Late notification of claim (2)

The insured travelled to Namibia for three weeks. During his first week, on the way to Luderitz, he encountered a sandstorm. Because of poor visibility, he drove at a speed of approximately 60 km per hour. When he returned to South Africa two weeks later, he contacted his broker on the first business day to enquire whether he was covered for the damage to his Jeep caused by the sand­storm. Because the damage was only to the bodywork and not to the func­tioning of the vehicle, he contemplated repairing the vehicle himself. Being a mathematics lecturer at Rand Afrikaans University, he had a busy programme and the first free time he had was on 2 May when he took the Jeep to a panelbeater. To his surprise, he was informed that the damage amounted to R30 938,41. On 6 May his claim form was completed and the following day was telefaxed to the insurer, which rejected liability because of late notification of the claim.    

The Ombudsman pointed out that the majority of claims are reported through brokers and not directly to the insurer. The ‘late’ reporting did not, in any way, increase the insurer’s liability and it had not suffered any prejudice. The insurer was persuaded to admit the claim.

Source: Ombudsman Newsletter : 01/04

Betterment

One evening, whilst the insured was travelling along a road in Durbanville, he was confronted by an oncoming vehicle on the wrong side. In order to avoid a collision he left the road and felt that the undercarriage of his vehicle had “hit something”. He stopped and climbed out to have a look, but because it was dark could not see any damage. He re­started the vehicle and drove until approximately one kilometer from his home when the engine started making a noise and eventually cut out. Only then did the oil light come on.

The insurer initially rejected liabi­lity on the grounds that the damage was caused by consequential loss. Subsequent­ly the insurer reconsidered the insured’s claim for R40 436,20, which included engine repairs, and paid R15 708,66 and claimed that the shortfall of R24 728,04 should be deducted because of betterment, i.e. the insured had a better engine.

The Ombudsman pointed out to the insurer that the critical question was to establish whether the market value of the vehicle had been increased by virtue of the repairs effected to the engine. The insurer had not demonstrated that this was the case. In the absence of clear evi­dence that the market value of the vehi­cle had been increased, the insurer would not be entitled to claim betterment. The insurer responded that it had spoken to three dealers, who all confirmed that the value of the vehicle had been enhanced, but they were not prepared to commit themselves to writing because they did not want their names to become ‘em­broiled in a consumer dispute’. The in­surer then conceded that it had no evidence to prove that the market value of the vehicle had been enhanced and paid the shortfall of R24 728,04.

Source: Ombudsman Newsletter : 02/04

Vehicle insured for private use but used for business

The insured, a councilor for a Metro Council, was on the way back from a meeting in Pretoria to her residence in Rustenburg. She came around a blind corner over a hill and unexpectedly saw a traffic police officer “standing in the middle of the road”. In order to avoid colliding with him, she applied brakes and collided with a truck. According to the traffic officer, the insured had not driven fast, but at an estimated speed of 80km to 90km per hour.

The insurer rejected the claim based on two grounds:

In view of the fact that the insured’s vehicle had skidded, and also that the insured was on a business trip having attended a meeting as Councilor, the insurer was entitled to reject the claim and the Ombudsman was not prepared to make a ruling.

Source: Ombudsman Newsletter : 02/04

Alleged failure to exercise due care

The Insured was involved in an accident whilst on his way home from work. The damaged vehicle was driven to his residence, which was approximately 700 meters from the accident, as the Insured feared for his and the vehicle’s safety if he remained at the scene of the accident. The accident occurred in a high-risk area at about 21h00. The claim was rejected as the Insurer alleged that the Insured had been travelling at an excessive speed (according to the Reconstruction Specialist) and that he had further damaged the vehicle by driving it in a damaged state.

Ombudsman’s response

The issues were debated with the Insurer who conceded that many claims arise from the negligence of the Insured and that Motor Insurance in particular caters for this, more so than perhaps in other classes of Insurance. It was also agreed that travelling at a greater speed than the speed limit did not in itself constitute reckless driving as alleged by the Insurer. The claim was then dealt with in terms of the Policy issued.

Source: Ombudsman Newsletter : 02/04

Alteration in risk

When the Insured took out his Insurance Policy with the Insurer, he was noted as the regular driver of the insured vehicle. His vehicle was involved in a collision whilst his son was the driver of the vehicle.  The Insurer investigated the matter and discovered that the Insured’s son had been the regular driver of the vehicle for some time. Had the Insurer been informed of the change in the risk profile, the premium would have increased from R126.16 to R207.14 per month. The Insurer accordingly received only 60% of the correct premium. 

Ombudsman’s response

In the light of the aforesaid factual scenario, the Ombudsman agreed with the Insurer that it was entitled to maintain its rejection of the claim.

Source: Ombudsman Newsletter : 02/04

Insured unaware of restrictive endorsement

On 8th November 2003, the Insured’s vehicle was involved in an accident whilst driven by her son.   The Insurer rejected liability on the ground that there was an endorsement on the Policy to the effect that cover was for named drivers only, and her son was not a named driver. The Insurer stated that after the vehicle had been damaged in a previous accident on 7th September 2003 whilst driven by the Insured’s son, the Policy had thereafter been endorsed as above.

Ombudsman’s response

The Insurer was unable to prove conclusively that the endorsement had been brought to the attention of and received by the Insured. The Insurer then met the claim.

Source: Ombudsman Newsletter : 02/04

Value of previously written off vehicle

The Insured’s Uno was stolen on 16th August 2003 outside the Game, Three Rivers. The Insurer rejected liability because the vehicle had previously been written off after an accident and it was in fact a rebuilt vehicle and registered as a Code 3 vehicle.

Ombudsman’s response

It was put to the Insurer that the Insured had suffered a financial loss and was therefore entitled to be indemnified. It was conceded that the market value could well be less than a second-hand (Code 2) vehicle. The claim was settled making allowance for the reduced market value.

Source: Ombudsman Newsletter : 02/04

Accident not reported to the police within 24 hours

Whilst the Insured was travelling from Hazyview to #FFFAF0 River at 20h30, a duiker ran in front of the vehicle and she hit it with the right hand side of her vehicle. She then swerved to the left and hit the curb and sustained so much damage that the vehicle had to be towed from the scene. In view of the fact that no other vehicles were involved, the Insured did not consider it necessary to report it to the Police. When she reported the claim to the Insurer, she was advised that she had to report the accident to the Police within 24 hours after the accident. She ultimately reported the accident to the Police seven days after the accident. The Insurer rejected liability on one ground alone, i.e. that the Insured had failed to report the accident to the Police within twenty-four hours after the accident.

Ombudsman’s response

The Ombudsman pointed out to the Insurer that there were no other parties involved and that the Insured did not consider it necessary to report the accident to the police. Furthermore, she may have been misled by the employee of the Insurer that she had seven days to make the report. In any event, the only possible prejudice the Insurer may have suffered by the Insured’s failure to report the accident, is that the Insurer may not know whether the Insured was under the influence of alcohol. If there were any suspicions, it would be straightforward exercise to contact the towing company and establish the facts from them, as they arrived on the scene shortly after the accident. In addition, the Motor Assessor would also be in a position to confirm whether the Insured had hit a buck. The Insurer was then persuaded to admit the claim.

Source: Ombudsman Newsletter : 03/04

Alleged that insured’s authorised driver was under the influence of alcohol and drove at an excessive speed

On 26th July 2003 and at approximately 20h45, the Insured’s Citroen XSARA 2.0, was damaged beyond economical repair. At the time of the accident, the vehicle was driven by the Insured’s brother. The collision occurred on the well-known R24 and the Insured’s brother was travelling towards the Airport, i.e. in an easterly direction. The Insurer rejected liability on two grounds, i.e., the driver was driving whilst under the influence of alcohol and he was driving at an excessive speed. The Insurer contended that although the breathalyser test indicated a reading of 0,015, the driver had admitted to consuming three beers and witnesses had described him as being under the influence of alcohol. Witnesses had also stated that the driver had been travelling “at a much higher speed than the allowed 120 Kms per hour”.

Ombudsman’s response

The Ombudsman pointed out to the Insurer that the Policy wording excluded cover whilst the vehicle was being driven by any person whilst under the influence of alcohol. The onus rested on the Insurer to prove the exclusion. The Insurer was unable to offer any evidence which would have supported the allegation. The witnesses at the scene were not qualified to express an opinion, particularly as the vehicle had rolled several times and the driver suffered injuries and shock which could have created the impression that he was under the influence of alcohol. The other issue raised by the Insurer of the vehicle being driven at an excessive speed, is not relevant in view of the wide cover in terms of the Motor Policy, which includes negligent acts of the driver of the vehicle. The Insurer initially would not concede, but after having been advised by the Ombudsman that he felt strongly about the matter and would consider making a ruling, the Insurer agreed to settle the claim.

Source: Ombudsman Newsletter : 03/04

Change in risk address wrongly presumed

“I have had some serious bad luck with cars in Johannesburg, having two cars stolen in six weeks in November and December 2002.” The Insured then decided to move to Great Brak River, Southern Cape, which became her permanent residence. Her ex-boss requested her to come and help out at her Boutique in Hyde Park, Johannesburg, for a couple of weeks in August 2003 while two of her staff members were away. The Insured then decided to go North during the month before, to make it a holiday with her fiancé and visit family and friends. She stayed with her parents in Kempton Park. Bad luck with cars continued to follow her, because on 2gth July she was involved in a collision whilst visiting friends in Pretoria, when an elderly man skipped a red robot. Her vehicle was eventually repaired and two days after receiving the repaired car, she was involved in yet another collision on 29th August 2003, when she got lost following directions from friends in Midrand to Kempton Park and was driven off the road by what appeared to be an oncoming taxi overtaking on a blind sharp bend. The Insurer rejected liability on the ground that she had failed to advise of the change of the risk address.

Ombudsman’s response

It was obvious that there was no permanent change in risk address and the visit to Johannesburg was for the reasons set out above, and to notify an Insurer every time an Insured temporarily visits or goes on holiday, is unreasonable. The Insurer met the claim.

Source: Ombudsman Newsletter : 03/04

Smooth tyres

The Insured entered a traffic light controlled four-way intersection at a speed of 50 to 60 Kms. per hour. The green light was in his favour and just before he entered the intersection, an Isuzu Bakkie entering the intersection from the opposite direction executed a turn to the lsuzu’s right, i.e. across the direction of travel of the Insured. The Insured applied brakes slightly and noticed that the light was still green for him. To his surprise a Mazda 323 followed the manoeuvre of the Isuzu Bakkie and a collision occurred. The Insured’s Toyota collided with the Mazda’s left rear door. The Insurer rejected liability on the ground that the two front tyres were smooth and that liability is excluded as a result of “damage to the vehicle caused by or attributable to an unroadworthy condition of the vehicle”.

Ombudsman’s response

The Ombudsman pointed out that having regard to the circumstances of the collision, the smooth tyres had no causal connection to the collision and the subsequent damage to the complainant’s vehicle. The Insurer was persuaded to meet the claim.

Source: Ombudsman Newsletter : 03/04

Insurer liable for towing and storage charges notwithstanding rejection of claim

On 4 September 2003, the insured was involved in a collision. 10 days later she was informed that an assessor had been instructed to assess the damages. The vehicle was at her home, but she was told to ar­range for it to be taken one of the insurer’s preferred panelbeaters and the insurer also confirmed to her that the towing costs would be paid. Three days later she received a phone call from the insurer informing her that her claim had been rejected because of her failure to pay the premium payment falling due on 1 September 2003. A week later she went to collect the vehicle, and to reco­ver it she was charged R1 880 release fees and a further amount of R250 to tow the vehicle back to her premises.

The Ombudsman agreed with the insurer that it was entitled to reject the claim based on the non-payment of the premium. In view of the undertaking which the insurer had given to the in­sured with regard to the towing charges however, the insurer was ultimately per­suaded to make payment of the full amount of R2 130.

Source: Ombudsman Newsletter : 04/04

Insured allegedly did not take proper care

The insured, who was the sole breadwinner, parked a Volkswagen Citi Golf in front of the Kempton Park High School to collect a fax. She locked the car, but because it did not have a separate boot, she put her handbag (containing spare keys to the car) under­neath the passenger’s seat and out of sight. In the 20 minutes it took to collect the fax, her car was stolen. The insurer rejected liability based on the insured’s alleged failure to take due and proper precautions to avoid the loss.

The Ombudsman pointed out that the whole purpose of insurance is to cover the insured for the negligence. The insurer was then persuaded to admit the claim.

Source: Ombudsman Newsletter : 04/04

Unroadworthy vehicle - tyre tread not meeting requirements

The insured was travelling on the R21, which is a dual carriageway in each direction with a grass lane separating the two directions of travel. Because it was already after 20:00, the traffic was quiet. He was travelling at an approximate speed of 110km per hour because he wished to remain in sight of his wife who was following him. The road surface was dry and visibility good. He suddenly became aware of dust/smoke, and in order to escape the total blockage of his front view, he swerved to his right-hand side. He clipped the right rear corner of a truck in front of him which resulted in his bonnet flying open. This totally blocked his view. All this hap­pened so quickly that he did not have time to brake.

Immediately after the aforesaid collision, the airbag inflated and all he could do was to take his foot off the accelerator and the car ultimately overturned.

Significantly, the car travelling immediately behind the insured was also caught in the emission of dust/smoke and he too swerved to his right-hand side, but collided with the in­sured’s wife’s vehicle. (His wife had in the meantime pulled over to the right hand lane in order to overtake the vehicle behind the insured). The insurer rejected liability because the left front tyre did not have sufficient tread on it.

The Ombudsman pointed out that at a speed of approximately 110km per hour the insured was covering approximately 31 metres per second. Generally, the Courts accept that the driver has a one second reaction time, and based on the facts as related by the insured, a full tread on the left front tyre would not have avoided the collision. The insurer was persuaded to admit the claim.

Source: Ombudsman Newsletter : 04/04

Failure to report accident to the SAPS within specified period

On 14th March 2004 and at approximately 23h00 the Insured was travelling home when he swerved in an attempt to avoid a stray dog and collided with a tree. In view of the fact that his vehicle was not badly damaged and no-one else was involved in the accident, he proceeded home and did not bother reporting the matter to the Police. The Insurer rejected liability on the ground that the Insured had failed to report the accident to the Police within 24 hours.

Ombudsman’s response

The Insured believed that in view of the circumstances of the accident, that there was no obligation to report to the SAPS. The Insured was not in possession of the Policy wording. In the circumstances the Insurer agreed to accept the claim.

Source: Ombudsman Newsletter : 04/04

Presumption of the driver being under the influence of alcohol

On Saturday, 5th June 2004, the Insured played golf in the country town of Porterville. He spent some time at the 19th hole and he was on his way home at 21h30.  One of the tyres of the vehicle burst, which caused the vehicle to swerve and he then collided with another vehicle. His vehicle rolled and landed in an open piece of land. One of his passengers fell out of the vehicle and walked approximately 5 Kms. to seek help. The Police as well as the Ambulance arrived at the accident scene where the Insured was still trapped in his vehicle. The Insurer rejected liability on the ground that the Insured was driving whilst under the influence of alcohol. The Insurer justified its rejection because the barman at the Golf Club had confirmed that the Insured was in the bar earlier on the incident date, a Farmer confirmed that one of his workers had picked up a crate of beer and two glasses where the vehicle had landed, the insured had been seen at the rugby where he had been seen drinking Red Heart Rum with his friends and a witness, who was at the rugby, confirmed that the Insured was “definitely drunk”.

Ombudsman’s response

The Ombudsman pointed out to the Insurer that no blood alcohol analysis had been taken, no breathalyser was administered and that the Police who arrived at the accident scene, did not arrest the Insured or call for a blood alcohol analysis to be taken. The Ombudsman pointed out that the mere fact that the Insured had been drinking prior to the accident, is insufficient evidence to establish on a balance of probabilities that the Insured was under the influence of liquor at the time of the accident. As they could not produce any evidence of the Insured being under the influence of alcohol other than observations of witnesses, the Insurer met the claim.

Insurer electing to repair a vehicle

The Insured’s vehicle a Daewoo Lanos was involved in a front end collision. The Insurer instructed a repairer to repair the vehicle, which in turn sub-contracted to Specialist Radiators to re-core the radiator. Three months later the engine overheated and it then transpired that the radiator should have been replaced and not re-cored. As a result of the defective repairs the Insured had incurred costs amounting to R8,794.38, which the insurer refused to pay on the ground that it had discharged its liability by instructing the repairer to do the necessary rectifications.

Ombudsman’s response

The election by the insurer to repair the vehicle attracts certain responsibilities, including that the vehicle be repaired in a fit and proper manner. The repairer in this case is effectively the agent of the insurer and any shortcomings in the repair of the vehicle is the responsibility of the insurer.   Following negotiations with the insurer it accepted the position and settled the claim by reimbursing the insured.

Source: Ombudsman Newsletter : 04/04

Unlicensed vehicle is not necessarily unroadworthy

The Insured’s Land Rover was damaged beyond economical repair in an accident.  The Insurer rejected the claim on the ground that the vehicle was ‘not roadworthy at the time of the loss’. The Land Rover was in fact unlicensed because the Insured had overlooked the renewal of the annual license some four months prior to the accident.

The Ombudsman pointed out that the Land Rover had been regularly serviced and maintained and was in excellent condition immediately prior to the loss.  The Insurer agreed that whilst the rejection of the claim accords with the technical dictates of the policy wording, this was one of those instances where the nature of the rejection bears little relationship to the proximate cause of the loss.  As the unlicensed status of the vehicle did not contribute to the loss in any way, the Insurer admitted the claim.

Source: Ombudsman Newsletter : 02/05

Application of betterment

The Insured’s vehicle was damaged due to vandalism and there was some paintwork that needed to be repaired due to scratch marks. Some sections of the vehicle needed to be re-sprayed totally in order to have the damage repaired properly. The Insurer deducted 25% Betterment on the paintwork done to the vehicle, which amounted to R884,35.

Ombudsman’s response

Whilst it is accepted that an Insurer is entitled to ask for an allowance for Betterment, the basis of ascertaining the extent of the Betterment should not be calculated on pure speculation. The Insurer agreed that a fair measure is the increase in the market value of the vehicle as a result of the repairs. In this case there was no evident increase and the Insurer refunded the amount of R884,35 to the Insured.

Source: Ombudsman Newsletter : 02/05

Exceeding the speed limit - reasonable precautions to avoid / minimise a loss

The Insured’s 19 year old son was travelling along the N3 from Durban.  At a point where the road dips down into a circle sweeping right-hand bend, the driver lost control of the vehicle and it was severely damaged. The Insurer rejected the claim on the “Reasonable Precautions” condition as the driver had admitted that he was driving in excess of the speed limit.  The particular road has the speed limit at 100 kph reducing to 80 kph and then to 60 kph.  It was between the 80 kph and 60 kph stretch that the accident occurred.

Ombudsman’s response

The Ombudsman referred to the well-known decision of Santam versus CC Designing CC, which clarified the onus which rests on the Insurer when relying on the “Reasonable Precautions” condition.  The Court held that for an Insurer to succeed it must prove that the Insured / Driver realizes the danger of loss, but disregards the danger because of existence of an Insurance Policy: in fact that the accident was caused by an intentional act.  A large number of accidents occur in the circumstances where the Insured / Driver is guilty of being negligent (even gross negligence).  The cover afforded by the Motor Policy is virtually on an All Risks basis including the negligent acts of the Insured / Driver. 

To uphold the declinature of a claim in the above circumstances, would largely negate the cover with the Insured / Driver constantly being challenged to demonstrate that he / she has in each case, taken “Reasonable Precautions” to avoid / minimize the loss.  This would create an untenable situation.  The Insurer agreed to settle the claim following amicable negotiations.

Source: Ombudsman Newsletter : 02/05

Late reporting of claim - no prejudice suffered by insurer

The Insured, who lived in Valhalla, Pretoria, visited his daughter, at North West University, Potchefstroom on 11th March 2005. The Insured left his Toyota Corolla with his daughter so that she could return with the car to her parents’ home at the end of the term about two weeks later.  On 18th March, the car was damaged in a collision in Potchefstroom.  On the same day, the Insured flew to Japan on a business trip and on his return on 29th March he telephoned the Call Centre of the Insurer to lodge a claim. The vehicle remained in Potchefstroom, and because his daughter was involved with examinations, she was only able to get a quotation on 22nd April and the Insured ultimately lodged a written claim on 29th April 2005.  The Insurer rejected the claim on the ground that the Insured had changed the risk without advising the Insurer, and had failed to report the claim to the Insurer within thirty days after the event.

Ombudsman’s response

The Ombudsman pointed out to the Insurer that the change of risk should not be relevant because the vehicle was involved in a collision, and in any event, the risk of damage to the car in Potchefstroom is less than Pretoria. Furthermore, notwithstanding the late reporting, the Insurer had suffered no prejudice.  The Insurer agreed to admit the claim.

Source: Ombudsman Newsletter : 03/05

Late notification

In November 2001 parking in Louw Street, Bethlehem was at a premium. Vehicles were angle parked in front of the Shoprite shopping area. The Insured’s wife noticed that a parked vehicle wished to exit from its parking bay and the Insured’s wife then went forward in Louw Street, to allow the driver to exit behind her. He then slowly overtook her. Whilst reversing in Louw Street with her flicker light on, the third party driver entered Louw Street from the full Shoprite parking area a few metres away and collided with the Insured’s vehicle. The third party driver suggested that each party bear the costs of the respective damages, but the Insured’s wife nevertheless insisted that the matter be reported to the Police, which she duly did. Because the damage to the Insured’s vehicle was minimal and well within his excess, he did not report the matter to the Insurer. Two years later, and on 11th November 2003, he received a Summons from the third party claiming payment of R8327,10.  He reported the claim to the Insurer, which rejected the claim on the grounds of late notification.

Ombudsman’s response

The Ombudsman could not find that the Insurer had suffered prejudice as it was ascertained that full details had been reported to the S.A.P.S.  It also emerged that the Insurer was able to verify the third party’s quantum that had been claimed from his Insurer. The Insurer agreed and settled the claim.

Source: Ombudsman Newsletter : 03/05

Insured held liable for defective workmanship of appointed motor repairer

On 2nd June 2003, the Insured’s Mazda 626 was damaged in a collision. The Insurer appointed a repairer to effect the repairs and on 3rd July 2003, the Insured collected his car. The Insured heard a strange noise emanating from the engine and the following day took the car back to the repairer, who took the car into his workshop. Later the same day, a Friday, the Insured collected the car. He did not use the car for the weekend. It was used on the Monday on the way to work when the car broke down. The car was then towed back to the repairer and the diagnosis was a broken cam belt. The repairer denied that he had ever worked on the cam belt and put the blame on a specialist cam belt installer, who had replaced the cam belt some six months prior to the collision and subsequently approximately 8500 km had been travelled. The Insurer appointed an Assessor, who had concluded that the damage to the cam belt was not accident related, but arose due to the wear and tear and lack of maintenance by the Insured.

Ombudsman’s response

The Ombudsman arranged for an oral hearing of evidence at which the repairer, the Insurer’s Assessor, the specialist cam belt repairer, the Insured and the Insurer were all present. The hearing was conducted on an inquisitorial basis.  At the hearing it emerged that the fault to the cam belt could not have emanated from the workshop of the specialist cam belt repairer. The welded bolt, which was found on the cam belt, was probably the cause of the failure to the cam belt, and could only have emanated from the workshop of the Repairer.  The Insurer agreed to pay for the cost of repairs to the cam belt, amounting to R15 662,90.

Source: Ombudsman Newsletter : 03/05

Use of the vehicle relevant at the time of the loss

The Insured, who lived in Pietermaritzburg, insured his Volkswagen Polo for private use.  On 11th April 2005, he went to Durban to consult with a client for a Life Insurance Company, which employed the Insured as a Consultant. After his visit with the client, he picked up his girlfriend in Chatsworth and spent the balance of the evening at Sun Coast Casino. At about 12.15 a.m. he dropped his girlfriend in Chatsworth and proceeded back to his home in Pietermaritzburg.  On his way home and at about 01h30 he was confronted with an animal in the road and lost control of his vehicle.  The Insurer rejected the claim on the ground that the Insured had been using the vehicle for business purposes.

Ombudsman’s response

The Ombudsman pointed out to the Insurer that the critical issue is what the vehicle was being used for at the time of the loss.  It was clear that the vehicle was used for private purposes at the time of the loss and accordingly he was entitled to cover, even though he may have used his vehicle on other occasions for business.  The Insurer then admitted the claim.

Source: Ombudsman Newsletter : 03/05

Description of use clause - private use

The Insured’s vehicle was damaged in a collision whilst he used it for private use and the costs of repair amounted to R5 960,29.  The Insurer applied an excess of R1 500,00 as well as a further amount of R4 807,37 being the back-dated business use premium since inception of the Policy.  The Insurer contended that because the Insured had previously used the vehicle for business, it was entitled to charge back-dated premiums.

Ombudsman’s response

The Ombudsman pointed out to the Insurer that it cannot ex post facto charge back-dated premiums for business use of the vehicle.  If a vehicle is insured for private use, but is used for business, the vehicle is uninsured whilst being used for business and resumes being insured when used for private use.  The Insurer arranged for the repair of the vehicle subject to the Policy Excess of R1 500.00.

Source: Ombudsman Newsletter : 03/05

Parent’s nightmare

On the morning of 21st April 2005, the Insured’s wife woke up at 6.00 a.m. and discovered that her son was not in his bed and that their car and the car keys were missing.  The Insured was woken up and he then started making phone calls and eventually went to the nearest Police Station.  Whilst there, he was informed that his son had taken the car during the night whilst his parents were sleeping and had a collision at 3.30 a.m. Because the son was afraid of his father, he did not wish his parents to be informed.

The Insurer rejected the claim based on an exclusion in the Policy that there is no cover should the vehicle be driven by an unlicensed driver.

Ombudsman’s response

It was pointed out to the Insurer that as the use of the vehicle by the son was unauthorised and without any knowledge or consent of the parents, the exclusion would not apply.  The Insurer conceded and settled the claim in the amount of R110 900,00.

Source: Ombudsman Newsletter : 03/05

Loss occuring during period that credit is given for the payment of premium: insurer liable

The Insured’s Policy incepted on 24th December 2004 when he took delivery of a motor vehicle.  The Insured received a certificate headed “Hold Cover Certificate of Insurance” and he subsequently received a letter from the Broker dated the 6th January 2005 advising that the first Debit Order was due on 1st February 2005.  On 12th January 2005, the Insured’s vehicle was damaged in a collision.  The Insured omitted to pay the premium due on 1st February 2005 and only did so on 14th February 2005.  The Insurer rejected the claim on the ground that by failing to pay the premium due on 1st February 2005 all cover had lapsed.

Ombudsman’s response

The Ombudsman pointed out to the Insurer that it had given until 1st February 2005 for payment of the first premium, and in as much as the loss occurred during the time period that credit had been given, the Insured was entitled to cover.  The Insured was entitled to cover irrespective of whether or not he had paid the premium on 1st February 2005.  Under the threat of a ruling the Insurer agreed to pay the claim.

Source: Ombudsman Newsletter : 03/05

Notification of claim to police within limited time period

A lecturer at a university dropped his son at school and upon returning home he activated his remote control device to pull in his garage rolling gate. In driving into his garage his daughter aged five ran towards the car and to create more space for her, he swerved more to his left hand side. Unfortunately, he scraped his car on the left hand side. He lodged a claim with his Insurer and it rejected the claim based on the fact that he had not complied with a policy condition, i.e. to notify the police of the event within twenty-four hours.

Although the insured is technically in breach of the policy condition, The Ombudsman will make a ruling based on the overall effect of the breach. In this case the SAPS will merely issue a reference number, but will not carry out any investigations and consequently the Insurer is in no better position. Such a ruling will obviously be made in the interests of equity.

Source: Ombudsman Annual Report 2002

What is consequential loss in terms of a Motor policy?

Situation On 10th March 2004, the Insured's almost brand new Toyota Hi-Lux (it had travelled 4,500 kills) in slippery and wet conditions fell onto its side. Passers-by pushed the vehicle back onto its wheels. Damage to the body was minimal. The Insured drove the vehicle to the nearest panel beater, which was about 15 kills away. After panel beating repairs, the vehicle was taken to Pretoria North Toyota where it was found that when the vehicle rolled on its side, oil from the sump leaked onto the piston, which resulted in excessive compression and which led to the bending of the con rods when the engine was started. The Insurer then rejected liability for the engine repairs on the ground that the Insured's negligence had caused damage to the engine.

Ombudsman's response

The Ombudsman pointed out to the Insurer that the purpose of a Short-Term Insurance Policy is to indemnify the Insured against his own negligence. It was not unreasonable for the Insured to have assumed that after the vehicle fell over onto its side, that the vehicle had sustained no further damage. The Insured did not observe any lights on the dashboard to warn him of potential damage to the engine. The Consequential Loss Exclusion relied on by the Insurer was not applicable and is more relevant to financial losses and not to resultant damage sustained in an accident.

Source: Ombudsman Annual Report 2004

Insurer electing to repair a vehicle

Situation The Insured's vehicle, a Daewoo Lanos was involved in a front-end collision. The Insurer instructed a repairer to repair the vehicle, which in turn sub-contracted to specialist radiators to re-core the radiator. Three months later the engine overheated and it then transpired that the radiator should have been replaced and not re-cored. As a result of the defective repairs the Insured had incurred costs amounting to R8, 794.38, which the Insurer refused to pay on the ground that it had discharged its liability by instructing the repairer to do the necessary rectifications.

Ombudsman's response

The election by the Insurer to repair the vehicle attracts certain responsibilities, including that the vehicle be repaired in a fit and proper manner.  The repairer in this case is effectively the agent of the Insurer and any shortcomings in the repair of the vehicle is the responsibility of the Insurer.  Following negotiations with the Insurer it accepted the position and settled the claim by reimbursing the Insured.

Source: Ombudsman Annual Report 2004

Failure to renew driving permit - materiality

Situation In the early hours of the morning, on 25th November 2003, the Insured's driver was on his way to a quarry in the course of the owner's business. As he approached the quarry, the road was blocked by a vehicle, which forced the insured vehicle to stop. Three men approached the vehicle and forced the driver to hand over the keys. The driver was taken a short distance away and made to undress. The thieves then drove off in the vehicle. The Insurers rejected the claim, as the driver was not in possession of a public driving permit as required by the Policy conditions.

Ombudsman's response 

The Insurer was asked to demonstrate the materiality of the permit to the act of hijacking. The Insurer referred to the recent Supreme Court of Appeal decision given in favour of the Insurer in similar circumstances to the above. The Insurers were however reminded of the Ombudsman's jurisdiction, which goes beyond legal issues and is extended to include equity. In broad terms, the Ombudsman will ask the Insurer to demonstrate that the breach was material to the loss or that prejudice had been suffered as a result of the breach. The Insurer conceded that there was no link between the holding of a public driving permit and the hijacking, and the claim was settled.

Source: Ombudsman Annual Report 2004

Driver's Licence not renewed

On 11th February 2004, the Insured was involved in a collision. When he reported the collision to the police, he then discovered that his driver's licence had expired on 22nd January 2004. He was not aware of the expiry of the licence and had not received any notice that it was due to expire. The Insurer rejected liability.

Ombudsman's response

The Ombudsman pointed out to the Insurer that the Insured was in fact a licensed driver but had omitted to comply with the formalities of renewing the licence. The Insurer admitted the claim.

Source: Ombudsman Annual Report 2004

Regular driver misrepresented

Situation The Insured (older man - OM) was the owner of a Volkswagen Jetta. When he took out his Policy he recorded that he was the most regular driver of the vehicle. On 20th October 2003. the vehicle was extensively damaged in a collision whilst driven by the male partner (younger man - YM) of the owner. The Insurer rejected liability on the ground that the YM was in fact the regular driver of the insured vehicle. It transpired that the YM had initially applied for the insurance, but when it became clear that he would have to pay a much higher premium, he recorded the OM as the owner and regular driver. The OM qualified for a seven-year no-claim bonus, which the YM did not qualify for. The Insurer stated that had the correct driver been noted, the premium would have increased from R424.80 to R1, 056.90 per month. It had only received 30% of the correct premium.

Ombudsman's response

The Ombudsman agreed that the Insurer was correct in its rejection of the claim.

Source: Ombudsman Annual Report 2004

Misinterpretation of policy situation

The insured had been issued with a policy in terms whereof the insurer undertook to pay medical expenses incurred by the insured person as a result of any road accident in which the insured person was involved.

This section of the policy reads as follows:

In this policy the insured person (also referred to as the applicant stated in the application) or the spouse of the insured person or an unmarried natural child, stepchild, illegitimate child or legally adopted child of the insured person wholly or substantially dependent on the insured who is aged less than 18 years at the inception, or, if unmarried and a full time student less than 24 years old.

At the time the policy was incepted on 31st April 1998 the insured's son was 18 years and four months old. He was accepted on the policy and at that time he was still in matric.

During 1999 the son completed a course in personal training, and since January 2000 he had been unable to obtain full time employment. He did casual part time work. Thus he was solely dependent upon his mother.

Accident

On Sunday 21st October 200 I the son was severely injured in a motor vehicle collision and his mother, the insured, incurred medical expenses totalling R43.6 I 5.46.

Accident

The insurer rejected the claim because the son was over the age of 18 and was allegedly no longer dependent upon the insured.

Ombudsman's response

The insured applied to the Ombudsman for assistance and as a result of one letter written to the insurer payment of the full amount of R43,615.46 was effected by the insurer to the insured.

Source: Ombudsman Annual Report 2003

Cause of damage specifically excluded situation

On Saturday afternoon the insured was travelling along Rossini Boulevard, a dual carriage way in Vanderbijlpark. Because of a heavy downpour there was water across the road. The insured, traveling in a two-year old BMW thought that the water was not deep and proceeded through it, but the water turned out to be deeper than expected and the engine eventually cut out. One of the residents of Rossini Boulevard used his Bakkie to pull the BMW out of the water. The engine was damaged, the cost of repairs amounted to R9,527.39. The insurer rejected liability on the ground that the policy exceptions, inter alia, stated - "We will not be liable for damage to the engine or tyres unless some other part of the vehicle is damaged at the same time".

Ombudsman's response

The Ombudsman agreed with the insurer that based on the facts, there was no cover in terms of the policy.

Source: Ombudsman Annual Report 2003

Rear tyres did not have a proper tread situation

The insured was travelling from Cavendish Square in Claremont, Cape Town, to his home in Fish Hoek, along the M3 freeway.

Just before the Tokai turnoff, a drunken pedestrian was illegally on the freeway and stumbled and ran into the road just missing a 4 x 4 Toyota. The insured swerved, braked heavily to try and avoid the pedestrian, but he ultimately collided with the pedestrian who survived the collision. The insurer rejected liability because both rear tyres had tread below the legal limit, and it was a condition of the policy that a vehicle had to be in roadworthy condition. The insured did not accept the aforesaid allegation, and the insurer then requested the AA to supply it with a report, which confirmed that both rear tyres were found to be unroadworthy.

Ombudsman's reponse

The policy issued to the insured contained a specific condition that the vehicle be kept in a road worthy condition at all times in terms of the Road Traffic Ordinance. The tyre tread depth did not meet the requirements. The insurer's decision was not based entirely on the policy condition, but also on the fact that the collision may have been avoided and the damages lessened had the vehicle tyres been in a good condition. Based on the facts, the Ombudsman concluded that the insurer was entitled to maintain the rejection.

Source: Ombudsman Annual Report 2003

Validity of driver’s license issued in Zimbabwe

The insured’s vehicle was damaged beyond economical repair in a collision that occurred on the N1.  His claim was rejected on the ground that although he was a South African citizen, he did not have a valid South African Driver’s License.

Ombudsmen's response The ombudsman pointed out to the insurer that the insured did have a Zimbabwe Driver’s License where he had been a permanent resident. He had obtained from Automobile Association an International Driving Permit, which was valid at the time of the collision. The Ombudsman in the meantime required the insured to convert his Zimbabwean Driver’s License to a South African Driver’s License.  As soon as confirmation of this was obtained, the insurer admitted the claim.

Source: Ombudsman Annual Report 2005

Materiality of learner’s license

The insured’s daughter, who had a Learner’s License and was unaccompanied, came to a halt behind a vehicle which indicated that it intended to execute a right hand turn. Whilst stationary, the insured’s vehicle was hit from behind by the third party vehicle. The insurer rejected the claim on the ground that the driver of the insured’s vehicle had a Learner’s license and she was unaccompanied by a passenger with a Driver’s license.

Ombudsman’s response

The Ombudsman pointed out to the insurer that although the driver did have a Learner’s license, the fact that a passenger with a Driver’s License did not accompany her was not material to the loss and the insurer then admitted the claim.

Source: Ombudsman Annual Report 2005

Unlicensed vehicle is note necessarily unroadworthy

The insured’s Land Rover was damaged beyond economical repair in an accident.  The insurer rejected the claim on the ground that the vehicle was “not roadworthy at the time of loss”.  The Land Rover was in fact unlicensed because the insured had overlooked the renewal of the annual license some four months prior to the accident.

Ombudsman's reponse

The Ombudsman pointed out to the insurer that the Land Rover had been regularly serviced and maintained and was in excellent condition immediately prior to the loss.  The insurer agreed that whilst the rejection of the claim accords with the technical dictates of the policy wording, this is one of those instances where the nature of the rejection bears little relationship to the proximate cause of the loss to justify pursuing a rejection.  The insurer agreed that in the spirit of giving effect to the principle that cause an effect should bear some relationship to each other and more particularly to the fact that the unlicensed status of the vehicle did not contribute to the loss in any way, the insurer admitted the claim.

Source: Ombudsman Annual Report 2005

Breach of policy condition not material to the loss

The Insured’s vehicle, while driven by her brother aged 32, was damaged in a collision.  The driver was stationary at a traffic light in Von Wielligh Street, Johannesburg, when the third party vehicle collided with the rear of the vehicle.  The Insurer rejected the claim on the grounds that the Insured’s brother has been in possession of the vehicle for approximately a year and that there had been a material change of risk of which it was not advised.

Ombudsman's reponse The Ombudsman pointed out to the Insurer that the driving experience of the driver did not in any way influence, contribute or cause the loss, and that the breach was accordingly not material to the loss. The Insurer conceded and paid the claim.

Source: Ombudsman's Briefcase Issue No. 02/2006

Despite late reporting (by six months), insurer accepts liability

The Insured’s Renault was damaged by hail on 22 May 2005, but he did not report the claim to his Insurers, because he was not able to fund the excess. Apart from suffering a cash-flow problem, the Insured was faced with unbudgeted expenses as a result of having to assist his father financially, who had fallen ill. The claim was only reported to the Insurer on 7 November 2005 and declined by the Insurer shortly thereafter. The main reason for the rejection was that there had been an escalation in the repair costs due to the delay of six months and, furthermore, it was not given the opportunity to inspect the damages.

Ombudsman's reponse The Ombudsman conceded that the Insurer had ground to reject the claim, but suggested that the difference in repair costs was ascertainable and it was patently obvious that the vehicle had, in fact, suffered hail damage during May 2005. The Insurer agreed to settle the claim on the repair costs as at 22 May 2005.

Source: Ombudsman's Briefcase Issue No. 02/2006

Insured’s failure to advise insurer of change in risk area and address

The Insured owned five vehicles, all of which were insured and it was noted on the information given that the risk area was Durban, where the Insured resided. A Toyota Conquest was regularly used by the Insured’s daughter, and in April 2005 was taken with her when she moved to Johannesburg to attend university.  The Insured did not advise the Insurer of the change in risk profile, and when a claim was lodged five months later, it was rejected. The Insured was adamant that there was no obligation on him to have advised the change in risk area as this requirement was never brought to his attention at any stage.

Ombudsman's reponse The Ombudsman (subject to critical comment from the Insured), advised the Insured that the Insurer’s decision was correct and gave the relevant explanation in support of the rejection of the claim.

Source: Ombudsman's Briefcase Issue No. 02/2006

Driving under the influence of alcohol

At about 00.15 the Insured was travelling from Glentana to the Grootbrak River when he failed to negotiate a sharp right-hand turn and ended up in the lagoon.  He alleged that there had been a power failure in the town “which made the circumstances worse”, and that there were no road signs indicating the sharp turn to the right. The Insured was initially arrested by the police who arranged for a blood sample to be taken. The criminal charge against the Insured for driving under the influence of intoxicating liquor was subsequently withdrawn. The Insurer rejected the Insured’s claim on the ground that he had been driving a vehicle whilst under the influence of intoxicating liquor.

Ombudsman's reponse Having regard to the circumstances of the collision as well as all the facts as stated above, the Ombudsman agreed with the Insurer that it was entitled to reject the claim.

Source: Ombudsman's Briefcase Issue No. 02/2006

Use of vehicle at time of loss of critical importance

At about 10h40 and whilst the Insured was on his way to visit his daughter who had recently had a baby, he was involved in a collision. The Insured was a representative of an abattoir company providing a service to the abattoir and to retailers and because he was intending to have a meeting after lunch with the directors of Springfield Makro in order to upgrade their butchery, the Insurer rejected the claim as they alleged that the vehicle had been used for business.

Ombudsman's reponse The Ombudsman pointed out to the Insurer that in as much as the Insured was on his way to visit his daughter, the Insured was using the vehicle for private use at the critical time of the loss.  The Insurer then admitted the claim, but deducted 15.9% prejudice in premiums because of business use, but the Ombudsman pointed out that premiums cannot be deducted even if it is known that the Insured had used the vehicle for business use as there was no cover for business use. The Insurer paid the client in full.

Source: Ombudsman's Briefcase Issue No. 02/2006

Onus on insurer to prove lack of due care

The Insured obtained her Driver’s Licence on 22nd July 2004 and eleven months later, i.e. on 17th June 2005 and at 08h00, she was on her way to work.  Her inexperience in driving was manifested in that she drove too closely behind a truck, which in her words, “stopped abruptly” and to avoid a collision with the back of the truck, she decided to enter the intersection and collided with a vehicle travelling in the opposite direction which was turning right.  When the Insured entered the intersection, the traffic light had already turned red against her. The Insurer rejected the claim on the ground that the Insured failed to exercise due care and the action taken was in their view grossly negligent.

Ombudsman's reponse The Ombudsman referred the Insurer to the well-known case of Santam Limited versus CC Designing CC 1994 SA 199, and in the unreported judgement of Stax Masango and Lloyd’s of London, where it is stated that the onus is on the Insurer to prove that the Insured’s “conduct was such that the one would conclude that he recognised the dangers to which he was exposed and deliberately courted them by taking measures, which he himself knew were inadequate to avert them or about the adequacy of which he simply did not care, in the knowledge that he was insured”.  Under threat of a ruling the claim was settled.