Posts tagged ‘Ombudsman’

What is the requirement to exercise reasonable precautions in maintaining the safety of the vehicle?

reasonable-precautions-in-maintaining-the-safety-of-the-vehicleWe 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) [1953] 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!

Also view:

Can your car insurance claim be rejected because you are a bad driver?

Can-your-car-insurance-claim-be-rejected-because-you-are-a-bad-driverHow does the quality of your driving affect your car insurance claim? On the roads it often becomes apparent that we are not equal – perhaps so when reflecting on Human Rights – but not so when it comes to driving ability!!

Fortunately for many vehicle owners the car insurers do not drive with them before issuing a car insurance policy. All that the car insurers have available to them is information as to driving experience, previous accident record and insight with regards to traffic violations. Much of these have to be disclosed by the vehicle owner and there is no measure of “Are you a good driver?”

We would like to reflect on the above question by referring to a decision from the Ombudsman. The question presented to the Ombudsman was whether the lack of due care – i.e. the failure to prevent the vehicle accident claim on account of poor driving – would justify the decision to reject the car insurance claim….

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.

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

Your car insurance claim would as a result not be fairly rejected simply because you are a bad driver. This will however have a significant effect on your car insurance premium if you are involved in several vehicle accidents. Not only will your premium increase sharply – but the car insurer could decide not to provide a specific high risk driver with car insurance cover!!

Does your car warranty provide the required protection?

The Car Insurance Blog has warned vehicle owners against many of the dangers lurking in car insurance products – and the false promises from unscrupulous operators. We have also warned policyholders to be cautious of the fine printDoes your car warranty provide the required protection? in car insurance policies!

It is however not only car insurance companies that we need to approach with caution – there are other hazards to approach with caution as well. Too many fraudsters are trying to exploit the car insurance industry with the purpose of making a quick buck!!

Car Insurance warranties and a warning from the Ombud!

The process of gaining mobility and protection requires more than the mere purchase of a vehicle and a car insurance policy. There are also other links in this chain – and one of these includes the car warranty.
It is these warranties that have attracted the attention of the Ombudsman for Short Term Insurance. Concern has been raised by the Ombudsman about the increasing number of false vehicle warranty contracts concluded between dealers and car buyers.

In a statement released on Wednesday, ombudman Brian Martin said it frequently transpires that vehicle warranty products sold to the consumer are not underwritten by a registered insurer and are nothing more than a contractual arrangement between the car owner and the dealership.

This contractual arrangement does provide sufficient protection to the unsuspecting new vehicle owner. In the event of a dispute, the Ombudsman does not have the jurisdiction to intervene and assist the vehicle owner – and the vehicle owner has to take the long and expensive road to of a legal process that will most likely end up in court!!

Licensed Insurers, the Ombudsman and Protection

We would like to urge all vehicle owners to gain an understanding of insurance and what is needed to protect themselves from the wrong operators.

Many warranties are marketed as insurance policies administered by “insurance administrators” and have all the hallmarks of an insurance policy. Later, when a “claim” is rejected by the so-called insurance administrator, consumers may be advised to turn to the ombudsman if they are unhappy with the administrator’s decision.

If the indicated dealer is however not a registered insurer, the issue falls outside the ombudsman’s jurisdiction. When these complaints are referred to the Motor Industry Ombudsman, this ombudsman also declines to intervene as he deals with matters relating to motor vehicles, and not financial services products.

The Ombudsman for Short-Term Insurance has recognized that the uninformed vehicle owner is placed in a nasty predicament and has referred this matter to the Financial Services Board. It is the duty of the FSB to clamp down on those providing financial advice and products which are not licensed by the FSB.

Advice to Vehicle Owners when Purchasing Car Warranties

• A car warranty is a financial product and should be sold by a licensed financial services provider.
• If this product is offered as an underwritten insurance policy, the vehicle owner will be protected under the financial legislation.
• A financial services provider will only be licensed if such provider has a sound financial status and the necessary professional liability insurance.
• The vehicle owner would be able to seek redress from the FSB and the Office of the Ombudsman.
• Ask questions regarding the product – and in particular whether it is underwritten by a registered insurer.
• Ask for the FSP number of the insurer and check whether this insurer is licensed with the FSB
• Always remember – if something appears to be too good to be true – it most often is!!

The Car Insurance Blog at would like to urge vehicle owners to take their time and do their homework when purchasing a vehicle warranty or car insurance product. You will most likely take the time to ask around and do research about the vehicle you wish to purchase – do the same for your warranty and car insurance product!!

Your car insurance company needs to know who is driving your car!

car-insurance-regular-driverIt is important to be aware of the terms and conditions of your car insurance policy. It is also important to remember that your car is not insured without full disclosure of who the regular drivers of that car might be. The vehicle owner can also nominate specific drivers of that vehicle.

The Ombudsman for Short-Term Insurance has warned consumers to ensure that they fully understand and appreciate the basis upon which motor vehicle insurance is taken out and the category of persons who are insured whilst driving a motor vehicle belonging to an insured.

Why is “regular driver” and “nominated driver” important for car insurance?

“Motor vehicle policies are commonly underwritten on the basis of a “regular driver” or a “nominated driver”, however in insurance, a regular driver is not the same as a nominated driver”, says Ombudsman for Short-Term Insurance, Brian Martin. These concepts are used in order to assess the risk associated with the insurance of a particular motor vehicle and the premium to be charged. The identity and profile of the driver of a motor vehicle is obviously an important factor in risk, which the insurer is being asked to assume as well as the premium to be charged.

Certain policies of insurance define a “regular driver” as “the person who uses the motor vehicle the most frequently and more than any other”, but this definition is not without its difficulties. The concept is not always capable of precise definition. Where a policy is underwritten on a “regular driver basis”, other persons may drive the motor vehicle in addition to the regular driver, provided that they are in possession of a valid driver’s license and that they are only the secondary driver. It is vitally important that consumers correctly identify the regular driver in instances where more than one person will drive a motor vehicle, to be insured on a regular driver basis and that they provide this information to their insurance company or broker.

A “nominated driver” policy, on the other hand, only gives cover to persons who are actually nominated and recorded as a nominated driver on the policy of insurance. Any person who is not nominated and recorded, as a nominated driver on the policy schedule will not be covered.

What will happen if the vehicle is incorrectly insured and incorrect information disclosed?

The Ombudsman says that consumers should take heed of the fact that if a vehicle is incorrectly insured or incorrect information is furnished to an insurer concerning either a regular driver or a nominated driver, this can result in a policy being declared void from inception, or the insurer having no liability to compensate for any loss or damage. “Utmost care must be exercised in ensuring that the correct information is given to an insurer and that any change in one’s circumstances or day-today living is immediately communicated to one’s insurer or broker so that the necessary endorsements or changes to the policy can be made. Changes could include any change of address or change in the use of a motor vehicle”, says Brian Martin.

If consumers are in any doubt as to whether their motor vehicle is correctly insured or not, they should seek professional advice from a licensed broker, insurance advisor or attorney prior to taking out the policy. This will avoid many problems that could arise at a later stage.

Also view:

Car insurance claims may find smooth tyres slippery!

Run FlatThe past weekend I have spent quite a bit of time researching run flat tyre technology and the impact that this might have on the safety of road users. Tyre manufacturers are spending much time and funding on efforts to develop tyres that are safer and that provides “run flat capabilities”.

All these efforts are however in vain if the driver does not monitor the condition of his tyres. We can have the best tyres from the most reputable tyre manufacturers, but if those tyres have travelled too far and are worn out, they simply would not be able to provide the necessary grip on the roads!

In the event of a car insurance claim, the insurer may reject the claim if the accident was the result of operating a non-roadworthy vehicle. We have previously written about this in a blog titled “Car insurance claim can be rejected if vehicle tyres are not roadworthy!”. It is however important to recognize that such dismissal/ rejection of a car insurance claim would not be accepted merely by having a look at the appearance of the tyres –but by asking whether there is a causal connection between the smoothness of the tyres and the accident.

We would like to refer to an actual example/ decision by the Ombudsman for Short Term Insurance.


The Insured entered a traffic light controlled four-way intersection at a speed of 50 to 60 Km/h. The green light was in his favour and just before he entered the intersection, an Isuzu white 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.

From the above we can see that the mere presence of smooth tyres will not repudiate the accident claim – it must be one of the factors that caused the accident. The condition and smoothness of your tyres are important for car insurance – but even more so for your safety on road!

Also view:

Will car insurance cover texting and distracted driving?

texting-and-distracted-drivingAt present we do not have reported decisions by the Ombudsman on this topic. There is however enough information to warn that a car insurance claim resulting from an accident caused by texting and driving could be rejected!

We would like to place ourselves in the position of the Ombudsman and consider how such a scenario would be judged. The best starting point would be to ask what the law says about cellular phones and driving…
We would like to refer to the Road Traffic Act and the “Prohibition on use of communication devices while driving”

1) No person shall drive a vehicle on a public road -

(a) while holding a cellular or mobile telephone or any other communication device in one or both hands or with any other part of the body;

(b) while using or operating a cellular or mobile telephone or other communication device unless such a cellular or mobile telephone or other communication device is affixed to the vehicle or is part of the fixture in the vehicle and remains so affixed while being used or operated, or is specially adapted or designed to be affixed to the person of the driver as headgear, and is so used, to enable such driver to use or operate such telephone or communication device without holding it in the manner contemplated in paragraph (a), and remains so affixed while being used or operated.

It is important to keep in mind that “using or operating” is not restricted to speaking on the cellular phone but could include reading or typing a text message, reading e-mail, surfing the Web, looking at video on your smart phone, looking up a number. Anything you do that requires manipulating a keyboard can cause a distraction and could be interpreted as such under this prohibition!

We should also consider reported decisions in other matters. The Ombudsman has agreed with insurers in the past and rejected claims for accident damage caused by drunk driving and the driving of non-roadworthy vehicles. It is only reasonable that the vehicle owner should only be covered when operating his vehicle within the Rules of the Road.

How big is the threat of texting as a driver distraction? I would like to quote just a few points made on the Arrive Alive website:

  • According to the National Roads and Motorists Association, text messaging drivers spent up to 400 percent more time with their eyes on the phone instead of on the road.
  • Texting reduces reaction times of drivers.
  • The reaction times of texting driver deteriorated by 35 per cent, much worse than those who drank alcohol at the legal limit, who were 12 per cent slower, or those who had taken cannabis, who were 21 per cent slower.
  • When texting, you tend to wander across the lane.
  • Research found that drivers who sent or read text messages were more prone to drift out of their lane, with steering control by texting drivers 91 per cent poorer than that of drivers devoting their full concentration to the road.
  • The Transport Research Laboratory concluded that text messages took on average 63 seconds to compose while the phone owner is driving- compared with 22 seconds when sent from a desk.

Research has found that driving while texting is a bigger danger than impaired driving! We can expect that more insurers will refer in policy documentation the exclusion of damage caused by texting and driving!

If there is evidence that the driver caused the accident while texting behind the wheel, we believe that any car insurance claim emanating from such accidents would be justifiably rejected!

Also view:

Car insurer must know the risk area where you are driving.

Risky driving!

Risky driving!

A car insurer has to take several factors into account when calculating the car insurance premium payable. These factors include driver factors, vehicle factors as well as the area where the owner intends to drive such vehicle most of the time. The car insurer will seek to determine how these factors will influence the risk to vehicle loss or vehicle damage.

Why do we say that the area is important? Insurers can use accident data and crime statistics to determine what the risks are to the specific vehicle to be insured. In the same way that property prices differ from area to area, the risks to vehicle damage or loss may differ. Accident data will reveal that many more accidents occur in the heavily vehicle populated cities than in towns and rural areas. Crime statistics will also confirm that the risks of hijacking, vehicle theft and smash-and –gab are much greater in our cities than in smaller towns! It is only reasonable to expect that the greater the risk of vehicle damage/ loss, the higher the insurance premium payable.

But why is this important for the insured client? Apart from determining the premium payable, the client will have to ensure that he abides by the stipulation in his policy contract to disclose any changes in the risk status. This means that in the event of a change in regular driver of the vehicle or risk area, the insurer has to be informed and a new premium calculated. Failure to do so will constitute a serious breach of contract and the insurer could reject his claim!

I would like to provide an example from a decision by the Ombudsman:


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 Response

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]

This Decision should raise alarm bells with many insured vehicle owners. This is a scenario that often plays out with our young drivers. Parents buy a vehicle for a child on the platteland or small town, insures the vehicle correctly in the name of the young driver and then allows the child to take the vehicle to the city where the child studies or works for 3 years or more.

Failure to disclose to and notify the insurer of such a change in the risk area is a breach of contract and will entitle the insurer to reject a claim by the insured client. We are not referring to short term changes such as business trips, vacation etc, but rather a prolonged change in risk area where the vehicle is to be driven.

We need to emphasize the importance of communication between the client and his insurer. Car insurance should not be seen as a once-off event – but rather as a continuous relationship between parties which needs adjustment and fine-tuning as circumstances change!!

Rather leave vehicle repairs in the hands of the experts.

Back Yard Repairs

Back Yard Repairs

Have you also been told about some brilliant backyard mechanic who can repair your vehicle at a fraction of the costs? A frequent cause of unhappiness for the insured car owner is unsatisfactory repairs to the vehicle after an accident. This complaint is usually that repair work done is inefficient or defective or that the vehicle has not been restored to its pre-accident condition, or a combination of both.

The Ombudsman for Short Term Insurance has provided the following guidelines to insured car owners with reference to repairs on their vehicles!

  1. Find out if your Insurer is paying you your loss or reinstating the vehicle.
  2. If it is paying your loss (less excesses) you deal with the repairs and the repairer. Your loss is usually the fair and reasonable cost of repair.
  3. If it is reinstating, the repairers are Insurers agents and should look to Insurers for payment; you are entitled to the repaired vehicle in as good a state as it was prior to the accident, and you are obliged to pay any excess to the Insurer.
  4. Read your policy conditions to check whether there is anything which affects the basic positions set out above.
  5. If you are satisfied that you can prove that what the Insured is offering you in money does not represent your proper loss less excess, or that the vehicle has not been properly restored, then object, and if you cannot achieve satisfaction, approach the Ombudsman if you want mediation, or your Attorney for advice as to whether you should assert your rights in a Court of Law.

We would like to advise that policy owners communicate clearly and without delay with the insurer. It is best to be fully aware of all the facts and to make an informed decision – only by doing so will you be able to avoid nasty and costly surprises!

Car insurance claim can be rejected if vehicle tyres are not roadworthy!

Tyres not roadworthy

Tyres not roadworthy

Can your vehicle insurance claim be rejected if your vehicle is not in a roadworthy condition? If we carefully consider this question we would have to agree that roadworthiness is indeed a fair expectation from the side of the insurer.

The insurer insures a roadworthy vehicle and provides cover for such a vehicle and the risks to the reasonable operation of such a vehicle. If the damage is caused by an unlicensed driver or a drunk driver – the insurer may reject the claim. It only seems reasonable that the insurer could expect the car to be driven in a roadworthy condition and with tyres that provide safe protection on the road!

The answer to this question is however not as simple. There have been differing decisions by the Ombudsman on this matter. It is important to consider the facts in each scenario and establish whether the condition of the tyres was in fact a direct cause of the accident and the damage to the car.

We would like to consider one example where the tread on tyres were considered an important contributing factor to the accident:

Example: Rear tyres did not have a proper tread situation.

Facts: 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, applied the brakes 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 response:

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]

We would like to urge all vehicle owners and policyholders to attend to the roadworthiness of their vehicles and to view the Arrive Alive website for more info on “Tyres and Road Safety”

Will my car insurer pay if the accident was caused by speeding?



This is a rather important question and something which has to be answered by the experts. We are aware that drunk driving, driving without a license, severe overloading etc might justify a car insurer refusing to indemnify the insured driver. We have alerted our insured vehicle owners to this in a previous post titled “Will my car insurance pay if I drive drunk”. But what about speeding…and if it can be proven that i exceeded the limit by only a few kilometres.

This matter was raised with the Ombudsman for Short Term Insurance, and we would like to quote from the example provided:

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.

It is comforting to know that a reasonable error would not refute indemnification under the claim. We could conclude from this that the occasional failure to monitor the speedometer will not add additional financial risk – we would however risk far more by not pointing to the dangers of speeding to life and limb of drivers and passengers! Speeding is a contributing factor to accidents and we would like to urge all vehicle owners to read more about this on the Arrive Alive website!