CRA Insurance Claims Explored
Here is how someone’s insurance claim was paid that was travelling at 173km/h because the insurer had no proof that speed was the cause of the accident.
The Ombudsman for Short-Term Insurance (OSTI) says that it has seen an increase in motor vehicle claims rejected for breaching ‘reasonable precaution’ clauses in recent years.
The group underlined this type of breach in a recent case where a vehicle was travelling 173km/h at the time of being involved in an accident.
In this case, the insured motor vehicle was damaged when it collided with the rear of another motor vehicle. The vehicle was being driven by the insured at the time.
The insurer rejected the insured’s claim for the damage to the vehicle on the basis that a policy condition requiring the insured to exercise due care had been violated.
It was submitted by the insurer that, by driving at a high speed, the insured had not taken reasonable care and precaution to prevent or minimise the loss.
The applicable clause in the policy states: “In order to have continuous cover and a valid claim (the insured) must use all reasonable care and take all reasonable steps, with the same degree of carefulness which can be expected from the reasonable man on the street, to prevent or minimise loss, damage, injury or liability.”
Challenging the rejection of the claim
The insured challenged the correctness of the insurer’s findings.
They said the insurer had no proof that speed was the cause of the accident, adding that the third party had driven into their path suddenly, resulting in the accident being unavoidable. They said that the accident was caused by the third party’s recklessness.
They further submitted that there was no proof that, had they been travelling within the speed limit, the accident would have been avoided.
The insurer’s response
The insurer contended that the insured was reckless in their conduct and had failed to uphold the duty of care imposed on them by the contract.
By travelling at a speed of approximately 173km/h, the insured had disregarded the rules of the road and had been reckless, which resulted in the accident taking place, it said.
The insurer also stated that, had the insured been travelling at the speed limit of 120km/h or less, they would have been able to minimise the extent of the damage.
The OSTI said that the policy condition of due care does not preclude a claim by the insured even if they drove negligently at the time of the collision.
The insurer can only rely on the reasonable precaution clause to avoid a claim if the insured was guilty of reckless driving in the legal sense – in other words if they deliberately or intentionally caused the collision.
The Ombudsman cited Gordon and Getz on the South African Law of Insurance (third edition) regarding negligence in the context of insurance law.
Gordon and Getz state that “the words ‘shall take all reasonable steps to safeguard from loss or damage’ do not impose on the insured the duty to drive with reasonable care.”
Relying on case law, the OSTI said that the question to be determined is whether the insurer proved, on a balance of probabilities, that the insured was reckless in relation to the collision – in other words, whether the insured “recognised the dangers to which they were exposed; and, if so, whether they deliberately courted them by taking measures which were inadequate to avert them, or about the adequacy of which he simply did not care” (Nathan NO v Ocean Accident & Guarantee Corp Ltd 1959 (1) SA 65 (N) at 211).
“While it may be construed that any person who drives a motor vehicle on a public road at night at a speed of 173 km/h is “reckless”, that does not mean that the insured was reckless for the purpose of the policy condition pertaining to due care,” it said.
The OSTI said that there was no evidence to support the insurer’s argument that, if the collision had taken place when the motor vehicle was travelling at 110 km/h, then the damage to the vehicle would have been extensively less and it would have been economically feasible to repair it, as opposed to having to write off the vehicle.
“The policy condition of due care does not preclude a successful claim for damage caused by the insured’s negligence. However, the insurer is not liable for damage that results from the insured’s reckless conduct. The policy contains an express exclusion of the insurer’s liability for “loss or damage caused intentionally by” the insured.”
The Ombudsman said the condition of due care would also not preclude a successful claim if, for example, the insured motor vehicle was driven at an illegal speed of 125 km/h at the time of the collision and expert evidence proved that, had it been driven at 120 km/h, less damage would have resulted from the impact.
“The insured’s version of the sudden and unexpected manner in which the other motor vehicle changed lanes and drove into his vehicle’s path of travel remained unchallenged by the insurer.
“The insurer failed to prove that the insured in fact foresaw that the other motor vehicle would suddenly move into his vehicle’s path of travel and that the insured recklessly reconciled himself with this,” it said.
The OSTI overturned the insurer’s decision to decline the claim and the insurer proceeded to settle the claim.