The case of Mr J, the new car and the missing photographs
On 23 April 2019, Mr J was involved in a motor vehicle accident. To cover the costs of the damage, he submitted a claim to his insurer.
Claim rejected
The claim was rejected on 7 May 2019 on the basis that the policy was not in force at the time the accident took place. Mr J’s policy began in June 2017. Around 28 February 2019, Mr J purchased a new vehicle, a 2018 Mercedes Benz C180 AMG A/T.
In February 2019, the insurer did not receive a premium and the policy subsequently lapsed. To reinstate the policy, the insurer required Mr J to pay his premium and submit eight photographs of his new vehicle. Until the insurer received and accepted the photographs, the policy was not in force and Mr J’s new vehicle was not covered. These pictures were never received by the insurer.
Mr J’s version of events
Mr J said the insurer continued to deduct premiums, even after the non-payment of the February 2019 premium. Therefore, he argued, the vehicle was covered in terms of the policy.
The insurer’s reply
The insurer argued that the requirements for the policy to be reinstated were the payment of the premium and the submission of the photographs, which was explained to Mr J in a sales call.
In another call, which took place on 8 March 2020, Mr J was requested to provide photographs of his new vehicle.
On 28 February, 28 March, and 29 April 2019 the insurer sent Mr J several SMS notifications which stated that for the cover to be activated it required the photographs, as well as the premium.
– The sales call:
OSTI received a transcript of the sales call in which Mr J was advised that, if a premium was not paid on the due date, Mr J had 15 days in which to pay the outstanding premium or the cover would lapse. If payment was not received after the 15 days and Mr J wanted the cover to start again, the insurer would require the outstanding premium to be paid as well as updated photographs of the insured vehicle.
Mr J acknowledged and understood these conditions.
– The policy-related call:
On 8 March 2019, the insurer contacted Mr J to inform him that the premium for February was not paid. Mr J stated that he reversed the debit order because the insured vehicle had been sold and he had purchased a new one. Mr J was told that the new car would only be covered from the following month once the insurer had received payment of the outstanding premium. Mr J was also requested to send photographs of the new vehicle.
The insurer argued that it was never provided with any photographs to confirm the condition of the vehicle before the accident. It was, therefore, unable to successfully validate the claim and that the damage that was claimed for had been the result of the accident.
The insurer relied on the following provisions of the policy to support its rejection of the claim:
2. STANDARD EXCLUSIONS
We do not pay:
2.1. If the policy is not in force at the time of the loss.
5.15. REINSTATEMENT PROVISIONS
5.15.1. Cover will be reinstated upon receipt and acceptance by the insurer of a first monthly premium and the eight required photographs.
8. WHAT THE POLICY WORDS MEAN IN FORCE:
Where the policy has lapsed due to the nonpayment of premium:
• A further monthly premium has been paid since lapse and the Insurer has received and accepted an updated set of the 8 required photographs.
• That the policy has not been cancelled.
OSTI’s findings
OSTI found that Mr J was informed of the fact that the February premium was not paid and that he was adequately advised of the requirements to reinstate the policy. Despite several requests, the photographs of the vehicle were not provided to the insurer. As the conditions for cover were not met, there was no policy in force at the time of loss. The insurer’s rejection of the claim was upheld.