Home OmbudsmanDecisions An insured vehicle owner must take all reasonable precautions to prevent loss, damage or liability!!

An insured vehicle owner must take all reasonable precautions to prevent loss, damage or liability!!

by jonckie@arrivealive.co.za

Why is it so dangerous to continue driving after a road crash! One of the reasons can be found in a decision by the Ombudsman for Short Term Insurance! A reasonable precautions clause requires that a client should take reasonable steps to prevent additional loss – and continuing to drive might cause that additional loss! 

We would like to share such an example addressed by the Ombudsman!

Case Study: Why you should not Risk Driving after Vehicle Damage from a Road Crash! 

Mr B submitted a claim to the insurer for accidental damage to his vehicle. Following the submission of this claim, the insurer appointed an assessor to inspect the vehicle and determine the nature and cause of the damage.

OSTI was advised that the vehicle sustained extensive damage and was declared uneconomical to repair. The assessor’s report stated that the vehicle suffered physical damage, including damage to the engine sump, which was as a direct result of impact from the collision. This portion of the claim was authorised by the insurer in the amount of R66 215.45. The report stated further that the vehicle also sustained engine damage in excess of R200 000.00.

According to the assessor, the engine seized as a result of the vehicle being driven without engine oil after the collision. The assessor stated in his report that the damage to the engine sump resulted in the loss of engine oil.

The continued running of the engine with a reduced oil pressure resulted in the motor seizing. According to the assessor, the loss of oil pressure would have been immediately indicated on the vehicle instrument cluster through the oil pressure warning light, to alert the driver to turn off the engine in order to prevent any further damage.

Mr B confirmed during the validation of the claim that he noticed a number of warning lights on the vehicle’s dashboard and that the vehicle was not responding well after the collision. He decided however to drive the vehicle further in order to get it to a place of safety.

In view of the assessment findings, the insurer excluded the claim for the engine damage on the basis of the following clause in the policy, under the heading “General conditions”,

“2. Prevention of loss You must take all reasonable precautions to prevent loss, damage or liability.”

The insurer asserted that Mr B breached a duty to take reasonable care to prevent further damage to the vehicle after the impact and as a result of such breach it was not liable to pay for the engine damage. The dispute concerned the insurer’s rejection of the claim for damages sustained to the engine.

According to the information provided, the incident occurred on 3 August 2018 around 18h00 along Jan Smuts Drive towards Sandton. Mr B was involved in a single vehicle accident. He stated that he had swerved to avoid a large pothole on the road and collided into a road divider on the right hand side between two lanes. Mr B indicated that the vehicle took a “heavy blow” on the bottom front and then came to a standstill.

Mr B stated that the specific location of the incident was just after a sharp bend on the road. When the vehicle came to a standstill he realised that it was encroaching in the right lane of the road just after the bend, increasing the chances of a collision with other vehicles travelling in the same direction.

Mr B stated further that, as it was early August, by 18h00 it was already dark and there were no working streetlights. He also stated that the area was wellknown for smash-and-grab attempts.

Mr B submitted therefore that, in the interests of the safety of other road users and himself, he did not exit the vehicle to inspect the damage. Mr B decided rather to drive the vehicle to the nearest point of safety, being a service station further down the road. Mr B admitted that during this time, there were “a large number of lights flashing in the vehicle”.

He stated however that he did not know what they meant and was unaware that there may be oil leaking from the engine which could cause major mechanical damage to the vehicle. Mr B also admitted that the vehicle did not respond well while driving it after the impact. He asserted however that his main concern was to get the vehicle out of the flow of traffic and to a place of safety. Mr B stated that he drove a distance of approximately 800 meters before the engine stalled. As the road was sloping downwards, Mr B was able to use the vehicle’s momentum to turn into a side road where he safely stopped the vehicle, approximately 900 meters from the accident scene.

Mr B stated that this was when he first inspected the vehicle and noticed that the engine was leaking oil.

In response the insurer asserted that Mr B was never in any imminent danger such as to justify his decision to drive the vehicle and ignore the warning lights. According to the insurer, Jan Smuts Drive is generally safe and the risk was not increased by the time of day that the accident occurred.

Mr B argued that the assessor’s claim that the loss of oil pressure would have been immediately indicated on the vehicle instrument cluster through the oil pressure warning light was unsupported by evidence. He also argued that the distance driven before the engine seized was insignificant and this should have been taken into account in the insurer’s assessment of the claim.

Mr B argued further that the insurer had an onus to prove that he was aware of the oil leak and that he knew that the engine may seize by driving the vehicle further, which he asserted the insurer was unable to discharge.

Mr B contended that the insurer must prove that his conduct was reckless as establishing that he was negligent was not enough to discharge the onus.

According to Mr B, his conduct under the circumstances was not reckless. He maintained that he was exercising his duty to take reasonable steps to prevent a further collision or criminal activity.

On Mr B’s version, he was not aware that there was an oil leak when he drove the vehicle from the accident scene. Mr B strongly maintained that he only became aware of the oil leak when he stopped and exited the vehicle after it shut down. Having reviewed the relevant claim form, Mr B’s incident description to his broker at claim’s stage and the submissions made in his details of complaint to this office, OSTI found no reason to reject Mr B’s assertion that he was not aware that there was an oil leak when he drove from the accident scene.

Ultimately, this fact did not change the outcome in this matter. The insurer relied on a “reasonable precautions clause” to decline liability for the engine damage. There are a number of conflicting decisions about how this clause ought to be interpreted and applied. Our courts have generally recognised that the clause must be restrictively construed so as to ensure that it does not undermine the very purpose of a policy of insurance by interpreting it as the basis for an exclusion of liability for Mr B’s negligence.

In order to rely on such a clause and justify the repudiation of a claim arising from damages caused by Mr B’s own actions, the insurer must show that Mr B acted recklessly.

In Santam Limited v CC Designing CC, 1999 (4) SA, 199 (C), a full bench of the Cape Provisional Division held that what the insurer had to show, in order to take advantage of the reasonable precautions clause, was that Mr B acted recklessly. The court held that the taking of reasonable precautions, as between an insured and the insurer, was not necessarily the same thing as the absence of negligence, in the delictual sense, on the part of Mr B. What was reasonable as between Mr B and the insurer, without being repugnant to the commercial object of the contract, was that Mr B should not deliberately court a danger, the existence of which he recognised, by refraining from taking any measures to avert it. It was not enough that Mr B’s failure to take any particular precautions to avoid accidents should be negligent; it had to be at least reckless, in other words made with the actual recognition by Mr B himself that a danger existed and regardless of whether or not it was averted. The purpose of a condition such as this was to ensure that Mr B would not, because he was covered against loss by the policy, refrain from taking precautions which ought to be taken.

More recently, in Renasa Insurance Company Limited v Watson [2016] ZASCA 13, the court in interpreting the reasonable precautions clause, contended that the court in CC Designing set the bar too high by requiring the insurer to prove recklessness on the part of Mr B. The Supreme Court of Appeal found that it was unnecessary to determine this issue in view of the conclusion it reached on an alternative defence raised in the matter, but held at the very least that proof of foreseeability is required.

This would require proof that a reasonable person in the position of Mr B would have foreseen the reasonable possibility of the loss eventuating and would therefore have taken reasonable steps to prevent it.

On the authority of CC Designing, in determining whether an insured’s conduct was reckless, regard must be had to the policy and the particular circumstances of the claim. As was recognised by the court, “the question of recklessness is predominantly one of fact”. On the facts provided to this office, OSTI was tasked with determining whether the insurer had established recklessness on the part of Mr B.

Driving the vehicle from the accident scene was not in itself an indicator of recklessness. However, it is a wellknown fact that a vehicle is in danger of major mechanical damage when it displays a warning light on its instrument cluster. The driver in these circumstances is required to exercise caution in his operation of the vehicle.

Mr B confirmed during the claim validation that he noticed a number of warning lights on the vehicle dashboard and that the vehicle was not responding well. On the authority of Watson, the foreseeability of loss eventuating was established. A reasonable person in the position of Mr B would have recognized the imminent or possible danger of significant mechanical damage to the vehicle, particularly after the vehicle sustained a “heavy blow” from the impact, and would have then taken adequate steps to avert this danger.

Whether Mr B was aware that the engine was leaking oil or not was immaterial in this case. Mr B’s duty of care can also not be pardoned on the argument that he had no knowledge of the mechanical operations of his vehicle or that he did not have an opportunity at the time to review the manual and determine the exact meaning of the warning lights.

A driver is expected to familiarise himself with the essential aspects of a vehicle’s manual. At the very least, a reasonable person would know to stop the vehicle and switch off the engine.

OSTI was persuaded by the insurer’s argument that Mr B was not in any imminent danger. In addition to what has already been stated by the insurer, OSTI noted that the accident scene was not at an isolated location or even very late at night which would increase any potential risk. Furthermore, Mr B had other options available to him before reconciling himself to the possibility of significant engine damage by moving the vehicle. These options included pushing or rolling the vehicle to the side of the road, securing the scene with warning lights/hazards, traffic cones or triangles and seeking roadside assistance from the insurer or from Mercedes.

When Mr B continued to operate the vehicle, he courted the danger of a separate cause of damage, which in OSTI’s view prima facie amounts to recklessness. He therefore assumed the risk for himself.

The damage which occurred after Mr B’s decision to drive the vehicle from the accident scene fell outside the scope of cover.

The distance travelled by Mr B in this case was also immaterial. Mr B’s representative demonstrated this when he pointed out that the damage to the sump must have been quite severe for all the oil to have leaked from the engine during that short distance. It remained that the vehicle would not have sustained engine damage if it had
not been driven from the accident scene.

The damage would have been limited to the sump. The insurer is not required to submit proof that the oil pressure light went on. As this is a civil matter, the issue is determined on a balance of probabilities and based on the information provided by the parties to the dispute. When evaluating the probabilities, the evidence was not considered under separate enquiries, but rather as a single investigation into the acceptability or otherwise of the versions put forward.

It was therefore sufficient for the assessor to draw his conclusions from the incident description and vehicle assessment on the damage to the sump. Having regard to the evidence as a whole, the balance of probabilities favour the conclusion that the oil pressure light was one of the many lights that went on. Whilst it was noted that Mr B disputed the assessor’s findings, he had not provided any independent evidence to show the contrary.

In light of the above, it was OSTI’s view that the insurer was justified in its decision to decline liability for the damage to the engine on the basis of a breach by Mr B of his duty of care.

OSTI was unable to assist Mr B and the matter was resolved in favour of the insurer.

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