The claim
The insured’s claim for the theft of his vehicle was rejected by the insurer on the basis that the insured did not comply with the security requirements stipulated by the policy. The insured vehicle was not fitted with a tracking device.
Following the rejection of the claim, the insured approached OSTI for assistance.
The insured’s version
The insured stated that the insurer was aware that the vehicle did not have a tracking device and accepted the vehicle with an immobiliser only.
The insured submitted that the policy wording was ambiguous as it indicated that either an immobiliser or a tracking device was sufficient for cover. The vehicle was manufactured with a factory-installed immobiliser and the insured was under the impression that this would be sufficient for cover.
The insured also referred to the schedule which made provision for the payment of an additional access where there was no tracking device installed.
The insurer’s response
The insurer referred to the policy schedule which read as follows:
“ADDITIONAL NOTES
Theft or hijacking or attempted theft or hijacking cover is subject to the following requirements:
Minimum security requirements for this vehicle: VESA level 3 or 4 immobilizer. An approved tracking device will also be accepted.
An Approved Tracking System is a Requirement for cover for theft/hijacking.”
The insurer submitted that the security requirement was noted in red font in the policy schedule.
The insurer also referred to the following policy terms and conditions:
“3.12.1 Tracking Device Warranty
The schedule will show if you have a tracking device installed or if we require a tracking device in the vehicle. If you have this system, you warrant that:
1. The tracking device is installed in the vehicle.
2. The tracking device is in working order and activated.”
“3.1.4 Our rights if you do not comply If you do not give us relevant, complete, and true information or if you do not immediately inform us of any changes, we have the right to do any one of the following:
a. Change the terms and condition of your policy.
b. Cancel your policy or any section of your policy from any date we choose. We have the right to keep your premiums for the cover you have had until the date of cancellation.
c. Treat your policy as if it had never started. In this case we will refund your premiums.
d. Not pay out your claim.”
The insurer also advised that communication was sent to the insured’s broker advising that a tracking device was required for the vehicle.
The insurer argued that the insured did not comply with the security requirement and as a result, the insurer was prejudiced in terms of thepotential recovery of the vehicle.
OSTI’s findings
On OSTI’s interpretation, the policy terms and conditions, read together with the schedule, were not clear; it was not clear that a tracking device was a requirement for theft/hijacking cover.
The policy schedule provided two minimum security measures, either of which would be accepted. The tracking device was posed as an alternate security requirement.
It was not effective for the insurer to simply highlight words in red. If the insurer wanted to make the tracking device an additional requirement, it should have clearly and plainly said so.
The tracking device warranty contained in the policy wording supported the insured’s argument.
Clause 3.12.1 (quoted above) does not state that the insured is required to have a tracking device and when read together with the schedule, clause 3.12.1 is only relevant if the insured had a tracking device (which is an alternate and not a sole requirement).
The insured had an immobiliser in his vehicle; this was noted on the policy schedule and was accepted for cover.
OSTI found that the insurer had not discharged its onus of proving that the insured had failed to comply with the minimum security requirement and recommended that the claim should be settled. The insurer agreed to settle the claim.
Also view:
Car Insurance and Safety on the Road
Truck Insurance and Goods-In-Transit Insurance