Scenario:
Mr D submitted a claim to his insurer in respect of damage to his insured vehicle following a vehicle accident. At the time of the accident, the insured vehicle was being driven by Mr D’s friend, Mr S (incident driver). The insurer rejected the claim on the grounds that Mr D did not take all reasonable steps and precautions to prevent the accident or loss. In this regard the insurer submitted that the incident driver travelled at a minimum of 150km/h in a 100km/h zone. In arguing the matter the insurer had elected to use the words “insured” and “incident driver” interchangeably.
The policy wording relied on by the insurer stated that the insured must take all reasonable steps and precautions to prevent accidents or losses. The insurer’s policy did not define the term “insured.”
Decision:
This office advised the insurer that, as its policy did not define the term “insured”, the ordinary grammatical meaning of “insured” had to be attributed to this word in the policy. In this regard reference was made to the below definition
of “insured”:
“The person who obtains or is otherwise covered by insurance on his or her health, life, or property. The insured in a policy is not limited to the insured named in the policy but applies to anyone who is insured under the policy.” (West’s Encyclopedia of American Law, Edition 2. Copyright 2008 The Gale Group, Inc.)
There was no indication that the incident driver in this matter was a party to the policy or insured in terms of the policy. Mr D had entered into the contract of insurance with the insurer. Mr D was the party who had suffered the loss.
This office further advised that the insurer had not reserved for itself the right to exclude liability, in terms of the policy, where a vehicle is driven by another party, who is not the insured on the policy. The insurer had thus not discharged the onus of proving that Mr D, being the insured, had failed to take all reasonable steps and precautions to prevent the accident or loss. On this basis it was OSTI’s view that the insurer was not entitled to decline liability for the claim.
The insurer had also advised that Mr D had failed to disclose a change in the risk. This rejection reason was not ventilated in the rejection letter nor had the insurer discharged the onus of proving that there had in fact been a change in the risk, which had not been disclosed and that such change materially affected the risk.
The insurer agreed to abide by OSTI’s recommendation that the claim be settled.