The complainant approached the Ombudsman for Short-term Insurance (Osti) for assistance with a claim for a motor vehicle accident in which his late brother, who was the insured, and the passengers in his brother’s vehicle were fatally injured.
The insurer rejected the claim based on a lack of due care, reckless driving, and over-speeding.
The case and the outcome are taken from the Osti’s Briefcase of March 2023.
Insurer: the complaint is time-barred
The insurer argued that the complaint was time-barred because the complainant did not approach the Osti within the periods stipulated in the policy for challenging the outcome of a claim.
The policy contained the following conditions:
“You must inform us about any event that could give rise to a claim within 30 days. If we don’t pay your claim or if you are not happy with the amount we agree to pay for your claim under this policy, you can write to us about your complaint within 90 days of the notice in writing of our decision regarding your claim. After the 90 days, you have a further 180 days in which you can start legal action against us, after which your rights to pursue the matter will be forfeited.”
The time limits also appeared in the rejection letter:
“In the interest of fairness and absolute impartiality, if you in any way feel that our decision is unjust, we draw your attention to your right to approach our internal ombudsman within 90 days of receiving the notice in writing of our decision regarding your claim […]”
“Should you wish to dispute the finding of our internal ombudsman, you have a further six months after expiry of the 90 days in which to pursue the matter either at court or an ombudsman, after which your rights to pursue the matter will be permanently forfeited.”
The insurer stated that the claim was rejected on 21 November 2019. The complainant was advised that he must provide the insurer with a power of attorney before his complaint could be investigated. However, the complainant failed to comply with the insurer’s request.
Insurer: the insured was driving recklessly
The insurer also provided a copy of the tracking report from the tracking device in the insured’s vehicle. The tracking report indicated that the vehicle was travelling at between 160km/h and 186km/h in a 100km/h zone seconds before the collision.
The insurer submitted that in the absence of any version of how the accident occurred, the insurer could rely only on the objective evidence before it. This was a single vehicle accident.
An assessment of the damage indicated that the vehicle had overturned. There were no salvageable parts from the wreck.
The insured exceeded the speed limit by as much as 86km/h. Considering the extent of the damage and the speed travelled, the insurer was of the view that the insured was not merely negligent, and the only inference that could be drawn was that the insured was driving recklessly.
Complainant challenges the insurer’s decision
The complainant advised that his mother was initially appointed as the executor of his brother’s estate, and she was handling the claim with the insurer. However, his mother subsequently passed away. The complainant had to apply to court to be declared the executor of his brother’s estate, which resulted in a delay in the submission of the complaint to the Osti.
The complainant also stated that he was not satisfied with the insurer’s answer to the complaint. The complainant stated that the tracking report could not be relied on because there was no indication from which tracking company the report came, and the report did not have the insured’s name on it.
The Osti’s findings
The Osti found that the complainant had shown good cause for his delay in pursuing the rejection of the claim and condoned the late submission of the complaint.
The ombudsman then considered the merits of the claim.
The policy contained the following provisions which were relevant to the claim:
Taking care
You and your family members residing at the insured property, or any person covered under this policy, must take all reasonable steps to avoid any accident and to prevent loss or damage to everything which is covered by this insurance and to keep all the property insured in good condition.
If you do not, a claim may be rejected, or payment of the claim could be reduced.
Criteria which we consider when assessing your claim
If the driver of the vehicle exceeds the speed limit by more than 40km/h, we may consider declining the claim. This accords with the spirit of the National Road Traffic Act.
The Osti said the provision that requires a policyholder to take reasonable steps to prevent loss or damage does not preclude a claim by the insured even if he drove negligently at the time of the collision.
The insurer must prove on a balance of probabilities that the insured’s conduct was reckless in that he recognised the danger that existed and proceeded with his course of action, not caring whether the danger is averted.
The question to be asked is not what the insured should reasonably have foreseen, but what he actually foresaw, how he in fact reacted, and his state of mind in conducting himself as he did.
There was no evidence of what went on in the insured’s mind shortly before the collision. Therefore, the Osti resorted to inferential reasoning based on the information available.
The insurer provided the complete tracking report, which contained the name of the tracking company and the licence plate number of the insured’s vehicle.
The Osti was satisfied that, on the face of it, the tracking report belonged to the insured’s vehicle.
The tracking report showed that the insured was travelling at extremely high speeds before the loss. The vehicle was travelling at 186km/h in a 100km/h zone just two seconds before the crash was detected by the tracking device. The road was straight, and the accident occurred in the early hours of the morning.
Considering all the factors and circumstances, the Osti found that the probabilities favoured the conclusion that there was an irresistible inference that the insured foresaw the loss of control over the vehicle as a consequence of travelling at a speed that was almost double the prescribed speed limit.
From the insured’s persistence in continuing to drive at an excessive speed, the logical inference was that he reconciled himself with that consequence. From these inferences, it followed that the insured acted recklessly.
The tracking report showed that the vehicle was travelling more than 40km/h above the speed limit at the time of the collision. In terms of the policy, the insurer was entitled to decline liability for over-speeding.
The Osti upheld the insurer’s rejection of the claim.
