By Moonstone:

Various statistics in the past years have indicated that millions of passenger cars on South African roads are not insured. A year ago, the Automobile Association reported that only 3 in 10 vehicles were insured. That means that when you are in traffic, many of the cars around you are probably not insured.

According to Peter Nkhuna, Senior Assistant Ombudsman, these statistics are simply based on recorded data. “It is my contention, however, that in reality a greater proportion of vehicles considered insured may not in fact be insured,” he reported in the 2019 OSTI Annual report. He adds that his submission may admittedly be based on anecdotal evidence as the ratio of complaints received by OSTI to the total claims submitted to insurers amounted to only 0.24% for 2019.

Nkhuna points out that some consumers of insurance products do not comply with the terms and conditions of their policies. This may be either because of not being aware of, or alternatively, simply ignoring such responsibilities. “We often find that insureds are of the mistaken belief that, by simply paying premiums, they are entitled to have all their claims settled by their insurers.” he mentions.

Most motor policies impose the following duties:

to make accurate disclosures at all times
to allow only licensed drivers to drive the insured vehicle
not to drive the insured vehicle whilst the driver is under the influence of alcohol
not to drive the insured vehicle recklessly
not to use an un-roadworthy vehicle on public roads
to maintain the insured vehicle and keep it in a good state of repair

“The effect of ignoring or not meeting any of the above responsibilities is that, when an insured claims, the insurer may be entitled to decline liability.”

A case in point

In one of the OSTI cases, the policy required that the insured keep his vehicle in a good state of repair. However, for whatever reason, the insured did not do this. While the insured was driving his vehicle, he noticed that the vehicle was on fire. He, together with members of the community in the area, tried to douse the fire. There appeared to the insured to be no specific reason why the fire ignited. The insured subsequently registered a claim with the insurer.

During the assessment of the claim, the insurer found that the vehicle had been poorly maintained. It was the assessor’s view that the fire was the direct result of the poor condition of the vehicle and that, if the vehicle had been properly maintained, the fire would not have occurred. On the basis of the assessor’s findings, the insurer declined liability for the claim and relied on the policy wording which stated that the insurer was not liable for “failure, breakage or rust, wear and tear, depreciation, perishing, fading, mechanical or electrical breakdown”.

It was also the ombudsman’s finding that the insurer’s stance on the claim could not be faulted.

“It is clear from the above example that, while this vehicle and the insured would have formed part of the statistics of the insured population, based on the condition of the vehicle, it was not, in fact, as comprehensively insured. In terms of the policy, there was no cover for any losses relating to accidents, fire or the other related perils where the condition of the vehicle was material to the loss,” Nkhuna explains.

“Insurance consumers are therefore encouraged to familiarise themselves with their policy terms and conditions and to conduct themselves accordingly, otherwise, they may find themselves unable to enjoy the benefits of their policies,” he concludes.

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