MiWay has lost an important court battle in which a client, identified as Mr. Molefe, challenged the insurer for rejecting a car theft claim based on the “dishonest and misleading information” clause.
Molefe’s car was stolen on 22 January 2018 after attending a social event on the eve of 21 January, where he and a friend met two women. Towards the end of the night, as the Molefe party was ready to leave, the women asked for a lift and he obliged.
Instead of going home, Molefe and his three passengers drove to his cousin’s house, but they did not stay long, as by request from the two women who said they were hungry they left to go to a nearby garage.
The next morning, Molefe woke up in an unknown location, without his car or other belongings, and with no recall of what happened.
He found a nearby store where he was able to contact his family, and after this, he reported the vehicle as stolen to the police and to MiWay, his insurer.
“An important fact to point out is that, when Mr. Molefe woke up at the unknown location, he was feeling ‘tired, sleepy, very much dizzy.’ He later found out that his friend, with whom he attended the event, had the same symptom,” said Mtho Maphumulo, senior associate at law firm Adams & Adams.
When submitting his claim with MiWay, Molefe initially said they left the event around 00h00. Later, he reported that they would have left much later, as they arrived at his cousin’s place after 04h00.
It is this discrepancy, among other less significant details, upon which MiWay relied the most for rejecting the claim, said Maphumulo.
Molefe proceeded to deregister the concerned vehicle and had it listed as stolen, however, “MiWay rejected the claim on the basis of dishonest and misleading information provided by Mr. Molefe,” said Maphumulo.
Molefe proceeded to challenge the decision in court.
A landmark victory
In deciding the final verdict on the case, the Magistrate Court had to establish whether the inconsistencies in Molefe’s evidence and his version of events were sufficiently material and prejudicial to warrant a repudiation of the claim.
The court assessed all the evidence provided by both parties, as well as the chain of events which included Molefe reporting and opening a case of theft at the police, reporting the incident to his insurer, seeing a doctor and submitting the medical certificate to his insurer, timeously obliging with the insurer’s requests, having an alibi congruent with that of his friend, and deregistering the vehicle and listing it as stolen.
MiWay also did not have any evidence that proved the contrary of Molefe’s story.
The court considered these factors holistically and concluded that Mr. Molefe had told the truth and that his vehicle was indeed stolen.
“The court further zoomed into the relevant clause upon which MiWay relied for the rejection of the claim and deemed it necessary to deal with the long-established principles of interpretation of clauses that seek to limit the liability of the insurer,” said Maphumulo.
“The court remarked that proper regard to the ‘main purpose, general nature, and object of the contract’ must be had.”
Whilst this case is specifically centred around car insurance, Maphumulo said it will undoubtedly find application in other insurance disputes, too.
“The case is significant for both the insurers and the insureds alike. For insurers, it serves as a reminder that claims should not be rejected on negligible discrepancies and inconsistencies,” he said.
“For insureds, this decision is crucial because it highlights the importance of supplying correct and truthful information to the insurer; complying with the insurer’s requests during the investigation stage of the claim; the importance of reliability and consistency.”
Keyword: South African insurer loses court battle in landmark car theft case