We have previously discussed the importance of getting to know the terms and conditions of the car insurance policy. This will enable the vehicle owner to better understand his rights and obligations and avoid any nasty surprises when receiving confirmation that his claim has been repudiated on account of some clause in his insurance policy!
Car Insurance disputes are often referred to the Ombudsman for Short Term Insurance if no agreement can be reached between the insured client and the car insurer. Once the Ombudsman has made a decision – he does so in a Formal Ruling – and the publication of these Rulings allows other clients some insight on the possible outcomes of referrals when they find themselves in the same scenario.
We would like to share a Formal Ruling addressing the requirement that the vehicle owner should take reasonable precautions in maintaining the safety of his vehicle.
Formal Ruling No. 1
(Ombudsman’s Reference D14/97)
Head note: Comprehensive motor vehicle insurance – Repudiation by insurer of claim on basis that insured’s negligent driving which resulted in damage to the insured vehicle, constituted a breach of a term requiring the insured to exercise reasonable precautions to maintain the safety of the vehicle.
Facts: The insured tried to negotiate a freeway off ramp at too high a speed in wet weather conditions and this resulted in damage to his insured vehicle. The insurer repudiated the insured’s claim, alleging that by driving negligently, the insured was in breach of a clause in the policy which provided that ‘[t]he Insured and/or any person enjoying cover under any section of the policy must exercise all reasonable precaution to maintain the safety of the property and to prevent loss, damage and accident’.
In debate the Ombudsman referred to the South African cases of Nathan NO v Accident Guarantee Corporation Limited (1959 (1) SA 65 (N)) and Paterson v Aegis Insurance Company Limited (1989 (3) SA 478 ©) and to the statement contained in Gordon & Getz on the South African Law of Insurance 4 ed (1993) at 183 that ‘one of the objects of insurance [is] to protect the insured from loss due to his own or his servants negligence…even if such negligence constitutes a crime’. Reference was also made to the comments of Lord Denning in Marles v Philip Trant & Sons Ltd (No 2)  1 All ER 651 (CA)).
The Ombudsman made a formal recommendation that since the interpretation of the clause in the way suggested by the insurer frustrates one of the major purposes of the insurance cover, it was not applicable in the circumstances of this case.
Whilst the insurance contract does certainly afford cover for the insured for loss due to his own or his servant’s negligence , this must be distinguished from circumstances where the claim is rejected as a result of the insured having been convicted of reckless and negligent driving , or circumstances where the claim is rejected as a result of for example the insured vehicle’s tyre / s being in an unroadworthy condition and the condition of the tyres playing a material part in the causing of the collision .
These are specific exclusions in the policy wording requiring different consideration on the merits of each individual matter. Furthermore it must be borne in mind that when the Ombudsman does consider a ruling , the following will be taken into account :
a. prevailing case authorities , legislation and legal principles ;
b. the Policy Holder Protection Rules ;
c. fairness and equity ;
d. proper insurance practice ;
e. the facts of each individual matter .
This Ruling confirms that the Ombudsman will always consider these cases in a manner that is fair and equitable. Each claim is to be considered individually and the vehicle owner may enjoy the peace of mind that if he abides by the Rules of the Road and does not intentionally cause damage to his vehicle – that the car insurer will also not be able to repudiate his claim on some technicality!