A South African motorist recently had to claim from his insurance after driving along Marine Drive in Cape Town and turning into Blaauwberg Road when he hit a curb, lost control of his vehicle, and collided with a pole.
However, his claim was rejected by his insurer, Insurance Underwriting Managers (IUM), for breaching the “reasonable precautions clause”, the effect being that he must now pay for his car’s repairs out of his own pocket.
While controversial, the reasonable precautions clause is rather common in insurance agreements and it often results in litigation, according to law firm Adams & Adams.
“Courts have found these clauses to be counter-intuitive, given that one of the main aims of insurance is to protect an insured against the consequences of their actions. As such, these clauses are interpreted restrictively,” said Jean-Paul Rudd, partner attorney at Adams & Adams.
“Furthermore, negligent conduct (conduct below the standard expected from a reasonable person) is usually not enough to breach the clause. Conduct of a reckless nature is usually required, meaning the insured knew of the danger associated with their actions but did not care about the result thereof.”
The degree of fault is decided on a case-by-case and insurer-by-insurer basis, and there are no defined guidelines as to what constitutes negligent actions.
Nevertheless, the insured party has certain obligations stemming from the insurance contract over and above simply paying their monthly premiums, and failure to comply will likely result in their claim being rejected.
“It, therefore, pays to read and understand the fine print of an insurance contract,” said Rudd.
A warning from the ombudsman
Last year, the ombudsman for short-term insurance (OSTI) in South Africa warned motorists of a rising number of car insurance claims being rejected because of the above-mentioned reasonable precautions clause.
In cases handled by the OSTI, it said the chief reason for these rejections was due to motorists driving above the speed limit at the time of the accident.
While the insurer is allowed to reject a claim, it must still prove that the driver was in fact at fault when the incident occurred, said the organisation.
Among a host of resources, the insurer may rely on evidence such as data downloaded from a vehicle’s onboard computer, vehicle tracking reports, and experts in accident reconstruction.
In a case of speeding, the vehicle’s onboard computer and vehicle tracking reports are usually sufficient evidence for an insurer to reject a claim, but simply driving over the speed limit does not mean the claim may be automatically rejected, said the OSTI.
For this to happen, the insurer must be able to prove that the motorist was not driving negligently, but rather recklessly.
“The insurer must put forward a convincing argument on which to conclude that the driver foresaw the possibility of an accident and deliberately courted the danger by taking measures which the driver knew were inadequate,” said OSTI.
“Alternatively, the driver simply did not care that the measures were inadequate and therefore recklessly reconciled himself/herself with the danger.”
If a driver does not admit recklessness, the insurer may use “inferential reasoning” based on the facts of the case to determine whether the motorist was acting in such a way.
If a motorist believes they were not in the wrong, they can lodge a dispute with the OSTI and it will then consider the evidence put forward by the insurer and determine whether it is reliable.
Keyword: Controversial car insurance clause nabs another driver