The Ombudsman for Short-Term Insurance published an information document for the public on the importance of providing accurate “regular driver” details.
The regular driver is the person who drives the vehicle most often in any monthly period. This person’s details, including his or her specific risk profile, are used to determine the acceptability of cover and the appropriate premium.
Details which influence the regular driver’s risk profile include age, profession, how long he or she has been in possession of a valid driver’s licence, insurance history, financial standing and so forth.
In one particular complaint referred to the Ombudsman, it came to light that the insured’s son had contacted insurer A and requested a quote for a motor vehicle to be placed on cover noting himself as the regular driver. The quote was however not taken up on the basis that the premium was too high.
The insured then approached insurer B for a quote in respect of the same motor vehicle, this time noting herself as the regular driver. The risk was underwritten on this basis and the insured was quoted a cheaper premium which she accepted and cover incepted.
A claim subsequently arose. An assessor interviewed a number of witnesses at the place of residence and employment of the insured and her son, including security guards, work colleagues, neighbours and petrol attendants at a nearby filling station. The assessor found that the insured’s son was driving the insured vehicle on a daily basis. The insured had never been seen driving the insured vehicle. In fact, the insured had her own vehicle which she drove daily.
The decision of the Ombudsman was that the insurer had submitted sufficient evidence, which on a balance of probabilities, indicated that the complainant’s son was in fact the regular driver of the insured vehicle. The Ombudsman therefore upheld the insurer’s rejection of the claim.
Consumers occasionally provide incorrect information to their insurer because they do not understand what is meant by the term “regular driver” but more often, it is done intentionally order to reduce the premium.
Whilst the insured may appear to be saving a few hundred Rand on a cheaper premium, the majority of insurance policies exclude cover for any loss or damage in circumstances where information material to the correct underwriting of the risk was misrepresented or not disclosed.
This rejection will also extend to third party liability cover, leaving the insured out of pocket in respect of his or her own damage as well as a liability claim which may be submitted by a third party.
Another misconception held by consumers is that insurers will never find out that the details of the regular driver noted on the policy are in fact not correct. An insurer has the right to validate any claim which is submitted under a policy. In addition to taking statements from the regular driver, the insured and the incident driver, this process may also include, conducting interviews with parties able to attest to the true identity of the regular driver of the vehicle, as in the case above.
There is an obligation on the insurer to ensure that the insured understands what is meant by the term “regular driver”. The questions asked at underwriting stage relating to the regular driver must not be ambiguous or contradictory but clear and precise in order to extract the correct information required for purposes of underwriting. The onus lies with the insurer, and the intermediary, to clarify all pertinent issues, to explain the purpose of the questions and the possible consequences.
It is not only imperative that an insurer is informed of the correct details of the regular driver during underwriting – the same applies to any changes during the term of the policy.
Click here to download a copy of the Ombud’s information letter for sharing with your clients.
