Decisions made by the Ombudsman reveal that car insurance companies will not easily evade their obligation to make payment in the event of late reporting of an accident. Even though there might be other legal implications for late notification, the Ombudsman will apply his mind to the insurance contract with a much broader view on fair interpretation.
What is the Test to be used?
- The test is one of fairness and equity.
- The ombudsman will ask whether the insurer has suffered any prejudice by virtue of the later reporting.
- The insurer would have suffered prejudice if the late reporting increased the insurer’s liability.
Examples of car insurance claims where there were late reporting of accidents
We would like to discuss how this test has been applied by referring to a few examples of cases before the Ombudsman.
Example 1: 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]
Example 2: Failure to report accident to police within 24 hours
Whilst the Insured was travelling from Hazyview 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.
Example 3: 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.
Example 4: 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.
- Ombudsman’s response
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.
Advice to policyholders
We would like to advise that all vehicle owners stay on the safe side of the law and that all accidents be reported within 24 hours. It is best to report swiftly, not only for car insurance purposes, but also to ensure that details are placed on record while they are still well remembered and easy to confirm!