Insurer rejects claim on the ground of contravening lockdown regulations. Are you covered?
In a recent case study, the Ombudsman for Short-Term Insurance (“Ombud”) found in favour of the insured who whilst contravening lockdown regulations was involved in a motor vehicle accident. The insured alleged that he was involved in an accident which occurred after he received his work travel permit, as he travelled from one of his homes to another to obtain his laptop which he utilised for work.
The insured’s claim was rejected by the insurer on the basis that the accident occurred at approximately 18:00 when the insured and his passenger were travelling to his second home during alert level 5 when any type of travelling was severely restricted, and mostly only allowed under exceptional circumstances.
The insured’s work permit only allowed him to travel between his home and his work place. The insured admitted that he travelled between his two homes for reasons which didn’t fall within the requirement of essential services. As a result, the insurer rejected the insured’s claim on the basis that he contravened lockdown regulations. The insured submitted a complaint to the Ombud in respect of the rejection of his insurance claim by the insurer.
The insurer justified its rejection of the claim by stating that it offered a payment holiday to its customers as result of the economic effects of the pandemic, as well as the fact their customers risk profile changed due to less motor vehicles and movement on our roads. Furthermore, the insurer contended that the customers who contravened lockdown regulations directly impacted the risk which they were guarding against by offering payment holidays. Lastly, the insurer contended that but for the insured breaching the lockdown regulations, the accident would not have occurred.
The Ombud found that the insured clearly contravened lockdown regulations which restricted every person’s movement. However, the Ombud contended that the insurer could not show how the motor vehicle accident was caused by contravening lockdown regulations. The Ombud held that there was no causal link between the accident which occurred and the contravention of lockdown regulations by the insured. Simply put, the breach was not material to the loss.
Source: Original article extracted from & published by FAnews, and authored by Kagiso Tshandu, Associate & Nokulunga Bulo, Legal consultant at Fairbridges Wertheim Becker Attorneys