Mr T submitted a claim to the insurer in respect of the theft of his motorcycle, which occurred on 11 August 2018, whilst it was parked outside his cousin’s home. The insurer rejected the claim on grounds that Mr T had failed to take steps to prevent the loss and failed to disclose a change in risk address.
The insurer submitted that on 11 August 2018 at 17h00 Mr T parked his motorcycle outside his cousin’s premises next to the gate on the pavement. Mr T went out and returnedat 23h30 and found that the motorcycle had been stolen. The insurer advised that Mr T had parked the motorcycle at his cousin’s premises for the past 2 months and had failed to notify the insurer of the change in risk address.
The insurer advised that the motorcycle was visible to any person passing by the home making it easy for any suspect to plan and carry out its theft. The insurer stated that Mr T did not secure the motorcycle with a chain or affix it to an object.
Mr T disputed the rejection of the claim and submitted that his motorcycle had been parked at various locations such as malls and restaurants without it being chained or secured to any object.
He further advised that the motorcycle had been kept at his cousin’s premises whilst undergoing repairs. The motorcycle had been parked outside the premises on the day it was stolen as the repairs had been completed.
On Mr T’s version there had been no change in risk address. The insurer submitted that in terms of the policy Mr T should have taken all reasonable steps and precautions to prevent the loss. The insurer submitted further that Mr T should have realized that there was a possibility that his motorcycle could be stolen and that he should have taken the necessary steps to prevent it from being stolen.
This office requested the insurer to address us on the materiality of the alleged change of risk address to the loss. The insurer was requested to advise as to how it would have underwritten the risk if it had been advised that Mr T would be keeping the motorcycle at his cousin’s premises for two months whilst undergoing repairs.
The insurer submitted that, although there was a change in address, this would not have affected the overnight parking as the policy stated ‘Locked garage or behind locked gates’. Mr T had kept the motorcycle behind locked gates whilst it was at his cousin’s premises.
The insurer had thus not proven that the change in risk address was material to the loss and the insurer had not demonstrated any prejudice suffered as a result of the alleged change in risk address.
Accordingly, the insurer had not proven that it was entitled to reject the claim on the grounds of a change in risk address.
The test for a successful defence when relying on a lack of due care clause is found in the case of Santam Bpk vs CC Design BK (1998) 4 All SA 70 (C).
The court in the aforementioned case provided that insurer had to prove on a balance of probabilities the following requirements in order to succeed with a defence of this nature:
1) that the insured was reckless
2) the insured knew that the steps taken were inadequate.
3) What the insured actually foresaw as opposed to what he should have foreseen.
4) The insured knowingly courted the action and consequence/s.
The insurer in this matter had failed to produce any evidence to the effect that it could reasonably be inferred that the actions of Mr T were reckless. Nowhere in the evidence did it indicate that Mr T acted recklessly by parking the motorcycle outside his cousin’s home. It could also not be reasonably inferred from the circumstances that Mr T knowingly “courted danger”.
The insurer had stated in its rejection letter that Mr T had not secured the motorcycle with a chain or to a fixed object whilst leaving the motorcycle outside the premises. The insurer had not proven that it was a requirement of the policy that, when leaving the motorcycle unattended, Mr T had to have secured it with a chain or to a fixed object.
OSTI therefore disagreed with the insurer’s decision to reject the claim on a lack of due care.
As the insurer failed on both rejection reasons it was OSTI’s view that the claim be settled. The insurer agreed to comply with OSTI’s recommendation and the claim was settled.