On 3 May 2020 Mr C submitted a motor vehicle insurance claim to the insurer which was rejected on the basis that Mr C contravened the Disaster Management Act Regulations 2020, more specifically Regulation 31 (2) under both the Level 4 and 5 protocols set in place by government.
Mr C’s version of the events
Mr C said that the accident occurred after he had just received a permit to return to work on 4 May 2020. Mr C was relocating from one residence to another and was travelling to get his laptop which he needed for his return to work the next day.
The insurer’s rejection
In the rejection letter sent to Mr C, the insurer said it “makes no admission of liability regarding your claim and reserve all our rights under this policy. We place on record that the above reasons for rejection are based on the policy’s terms and condition and is neither exclusive nor exhaustive of our reasons for rejecting the claim. We, accordingly, reserve the right to entertain the matter more comprehensively at the appropriate time and forum, should the need arise.”
Mr C alleges that the rejection is unfair
Mr C approached OSTI for assistance because he felt that his claim had been unfairly rejected. OSTI requested the insurer to provide a copy of the policy wording and to highlight the relevant policy provision that it relied on to justify its rejection of the claim.
OSTI mentioned that, if the policy provision on which the insurer relies is not material to the loss, then the insurer should consider settling the claim.
The insurer’s response
The insurer advised that when it investigated the accident, the following was established, which had a material impact on its decision to reject the claim:
“In an interview conducted with the complainant, it was established that the accident event occurred at about 18:00 on 3 May 2020 when the complainant was travelling along the Golden Highway near Lenasia South. The complainant had a passenger in his vehicle at the time of the accident event.
The complainant and the passenger, who was in the vehicle with the complainant when the accident had occurred, had both confirmed that they had, during the lockdown (Alert Level 5) on 26 April 2020, travelled from Soweto to Orange Farm to the complainant’s second residence. On this date, South Africa was observing Alert Level 5 of the lockdown and travelling was severely restricted and only allowed under strict directions. The complainant, according to his own admission, travelled between his residences in order to cast an eye over his second house and not for essential services or to move to a new house or to move back to his primary place of residence, should he have been forced into lockdown at his second place of residence.
Both the complainant and his passenger further confirmed that on 3 May 2020, when the accident event occurred, they were travelling from this residence in Orange Farm back to Soweto.
It is, therefore, true that under Lockdown levels 4 and 5 persons had to remain home and were only allowed to travel under circumstances as published in Gazette 43258 and amendments. In considering the regulations and its directives the following was found to be true:
The complainant was not performing an essential service. The complainant was not moving to a new residence. The complainant was not returning to his place of residence before lockdown; and the complainant was not moving children nor attending a funeral.
Therefore, the relaxation on the restriction of movement did not apply to the complainant’s social movement between his households as was the case when the event occurred.
It was noted, at this stage, that the complainant was in possession of a work permit which specifically allowed him to travel between his residence in Chiawelo, Soweto to Bryanston (his place of work).
However, this permit did not provide for the travelling between Orange Farm to Soweto, which was the route the complainant was travelling when the accident event occurred, and therefore, the complainant failed to have the required permissions to travel between these two locations and was,consequently in contravention of the Regulations.
In consideration of the above Regulations and the date of the accident event, it is clear that the complainant, by being on the road when the accident event occurred, had contravened the Regulations in that his purpose for being on the road was not for any of the instances as provided for in terms of Regulation 16(2).
The level 4 Regulations, as indicated in point 3.4 above took effect from 1 May 2020, and therefore when the accident occurred, the complainant was in contravention of Level 4 Regulations. Should the complainant have complied with these Regulations as it pertained to the movement of persons, the complainant would not have been travelling on the road when the accident event occurred and the accident would, therefore, not have occurred.
In response to the COVID-19 pandemic, the insurer stated that it had undertaken to assist its clients in these trying financial times. To this end, it offered clients who were unable to afford their premiums during the lockdown, a payment holiday for that month. This enabled the insurer to successfully offer this option to their clients due to the change in its risk resulting from the restriction of movement of persons under the Regulations, which, in turn, meant fewer persons travelling on the roads, and, consequently a lowered risk of accident events occurring. Were it not for the Regulations provided for under Regulation 16, the insurer would not have been able to make such a risk-adjusted decision to help those clients who were not able to afford their monthly premiums.
Therefore, clients who contravene this Regulation 16 directly impacts its risk.
The complainant, by merely being on the roads on both 26 April 2020 and 3 May 2020, when the accident event occurred, had increased the insurer’s risk in that, firstly, he was doing so in contravention of both the Level 5 and Level 4 Regulations, respectively. Secondly, if he had complied with the Regulations, it would have invariably reduced the insurer’s risk to the extent that the accident event would not have occurred in the first place as the complainant would not have been on that road or travelling that route at all.
As a result of the above submissions, this formed the reasoning which underlies the repudiation of the complainant’s claim…”.
The insurer also said the following clause from the policy schedule allowed them to repudiate claims where the insured or driver of the vehicle breaks the law:
7 “If you or the driver driving your car does not have a valid driver’s license, or if you break the law”.
OSTI’s findings
OSTI advised the insurer that its response did not address the materiality of the policy exclusion to the loss itself. In other words, the insurer had not shown that the accident was caused by the insured breaking the law.
OSTI considered the matter from an equity perspective and found that there was no causal connection/link between the breach of the law and the accident. Accordingly, OSTI recommended that the insurer settle the claim.
The insurer confirmed that it would abide by OSTI’S recommendation and agreed to settle Mr C’s claim.