The annual report from the Ombud for Short-term Insurance (OSTI) always contains very educational case studies. This one sets how the circumstances behind a claim, which was refuted on the grounds that there was no forcible entry, were investigated.
The OSTI’s approach is that, where there are alternative methods of establishing that the loss was authentic, the insurer will be required to settle the claim. Video footage is one such method, as was the case in this instance.
Background
The insured reported a claim for a bag that was stolen from his car boot. The bag contained travel documents and some personal electronic items. The insurer declined the claim on grounds that there was no violent and forcible entry into the vehicle. According to the insured he locked the vehicle by remote control while walking away from the vehicle.
The insurer relied on the standard policy condition that the insured property should have been concealed in a locked boot or compartment forming part of a locked vehicle and that there was violent and forcible entry to the vehicle.
The OSTI viewed the video footage in question and it was clear that the insured suffered what appeared to be a genuine loss in a targeted theft incident.
From the available evidence it appeared that the thieves were operating some sophisticated scheme through which the theft was effected. There was otherwise no explanation why the vehicle, from which the thief disembarked to commit the theft, happened to arrive shortly after the insured had left his vehicle and somehow targeted his vehicle.
The insured added: “It is therefore reasonable to conclude that a company with such a values-driven approach would use policy wording to protect themselves from both false claims and gross negligence and not as a tool or loophole by which they can get out of paying a proven, credible claim by a client in good standing. I believe that the CCTV evidence both shows that there was not gross negligence and also proves that a theft did indeed occur from a concealed compartment, in a locked boot.”
The OSTI suggested to the insurer that, on a balance of probabilities, the thieves had used a sophisticated method to keep the insured vehicle under surveillance and to gain access to it. This then meant that the insured could not have negligently left the vehicle unlocked, but rather that the cause of the loss must have been the use of this sophisticated method to gain access into the vehicle.
It would therefore be unfair for the insurer to decline the claim for what seemed to be a genuine loss, albeit the insurer is entitled to do so in terms of its policy wording.
Fairness and equity
The OSTI is entitled to not only evaluate the merits of a dispute on the relevant contractual and legal provisions, but also on considerations of fairness and equity. Its view was that the circumstances of the loss justified an approach to the insurer that it considers settling the insured’s claim.
In response, the insurer emphasised that the video footage did not show that the insured had locked the vehicle when leaving it and the insured could not be given the benefit of doubt. The locking of the vehicle, the insurer submitted, would have prevented the loss and there was no basis on which to conclude that the insured had locked the vehicle or that any sophisticated device had been used to effect the loss.
In the light of these arguments, the OSTI found that there was no basis on which to compel the insurer to settle the claim.
We have seen a number of recent examples where sentiment overrode legalise in cases determined by informal dispute resolution bodies. The problem is that this can create unrealistic expectations, as was evidenced in the widely discussed business interruption cases. A fair number of clients whose contracts clearly stated that the term of indemnity was only for three months, were adamant that they should be compensated for a longer period when the court found in favour of Ma-Afrika.
