Office of the FAIS Ombud dismissed two motor insurance complaints

Two complaints relating to motor insurance have been dismissed by the Office of  the Ombud for Financial Services - in one case because of misrepresentation by the Complainant and in another because there was no evidence that the intermediary may have incorrectly advised the Complainant.

Charles Pillai (pictured 1), the Ombud for Financial Services Providers, ruled that John Anthony Maciel of Groblersdal had no case against Bouvest 2340 CC, trading  as A Nell Makelaars, after his light delivery vehicle, a 1999 Mitsubishi L300 worth  R48 000, was stolen and the insurance claim had been subsequently rejected.

The Complainant insured his motor vehicle with Santam in August 2005 through the Respondent which acted as broker. His dealings were with Ms Susarah Maria Vos.

The vehicle was stolen a few months later in November. A claim was duly submitted to the insurer but was rejected. The policy was also cancelled and  premiums refunded on the ground of non-disclosure, alternatively misrepresentation of a material fact.

The insurer in its letter of repudiation alleged that the Complainant had failed to disclose that his previous insurer had cancelled his policy or had alternatively stated the vehicle would be used for private or domestic purposes when it was used for business purposes as well.

The Complainant said he had disclosed - through his wife - that he was previously insured with SA Underwriters but the broker failed to mention it in the proposal form.

He alleges that Vos did not disclose it even though she had been given a piece of paper on which previous insurers and the claims history had been written. He, therefore, laid the blame for the non-disclosure squarely at the door of Vos.

In a letter to the underwriters, Vos said the omission was due to her own fault and that the Complainant should not be penalised for it.

At first blush one would have thought the admission ought to have persuaded her employer (the Respondent) to accept liability and settle the matter with the Complainant. The Respondent, however, believed it should not be held liable as in any event, the insurer would not have accepted the claim because of the misrepresentation about the use of the vehicle.

In an email dated 20 February 2006, Brolink’s attorney, an Arthur Davies wrote to Ms Natasha Laing at Santam that the policy was not avoided on the basis of the inaccurate claims history but: “because there was a misrepresentation regarding who cancelled the previous policy”.

“Had we known the previous insurer had cancelled the policy we would not have accepted the policy,” said Davies.

Davies then goes on to mention that although the vehicle was covered for private use the complainant had in fact told the assessor who investigated the claim that when he bought the vehicle (a light delivery van or ‘bakkie’) his intention was to use it for furniture and refuse removal so that it could pay for itself.

Says Davies: “Had we known this we would not merely have charged a higher premium....we would have declined the risk.”

The Ombud found that the Complainant and his wife had given differing and conflicting versions of the facts and also made a misrepresentation to SA Underwriters which led to the latter cancelling the Complainant’s insurance with it due to non-disclosure of previous claims.

On the other hand, Vos readily admitted her mistakes and even implored the insurer not to penalise the Complainant for her mistake. The mistake was not material in the circumstances.

“The crucial issue here is that even if Vos had not made the admitted mistakes, the insurer would still have rejected the claim on the ground of misrepresentation.

“In the result, I am unable to find in favour of the complainant,” the Ombud said. Click here to read the full determination - (PDF file 56 kb)

In another matter, the Deputy Ombud for Financial Services Ms Noluntu Bam (pictured 2) dismissed a complaint by Shaun Jansen Van Vuuren of Germiston against Action Plan Management CC of Bedfordview.

The Complainant had caused his off-road motorbike to be insured through the Respondent with Constantia Insurance Company Ltd., for amongst other perils, theft. Wheels Underwriting Managers (Wheels) were the underwriting managers.

About five weeks after inception of cover the motorbike was stolen from Complainant’s locked garage. He duly claimed compensation for the loss of his motorbike, which was insured for R50 000.

The insurer rejected the claim on the grounds that a tracking device or alarm had not been fitted on the motorbike even though it was a condition for cover.

The Complainant informed the Office of the FAIS Ombud that he was not correctly advised by his broker (the Respondent) about what he “had to do to qualify for full insurance cover on the off-road motor bike”.

Ms Bam said it was common cause that Riaan faxed a proposal form to the Complainant.

The Complainant completed it and sent it back to Riaan, who confirmed in writing on 10 June 2006 that the Complainant was comprehensively covered.

The Complainant was aware that the form contained special conditions, amongst others, that riders under the age of 28 years were excluded from cover.

Theft cover for machines valued at R40 000 or more was also excluded, unless fitted with an approved tracking or alarm system.

A further condition was that there would be no theft cover for machines not kept in a locked garage overnight, unless fitted with either an alarm or tracking system. It is not in dispute that at the time of the theft the motor cycle was in a locked garage which had been broken into.

The Complainant said his bike did not have a battery. Since a tracking device would require a power source, he did not think the requirement applied to him. It was only after the loss that he found out from the Wheels that there was a specific device for that purpose.

Deputy Ombud Ms Bam said the first issue to be determined is whether there rested a duty on the respondent to inform the complainant that an alarm or tracking device was required to be installed for theft cover.

This may be disposed of very simply. The Complainant admits being aware of the requirement for an alarm or tracking device prior to the claim having arisen.

“”The crisp issue to be determined is whether, where the complainant was already aware of the requirement, there rested a duty on the respondent to inform the complainant that there existed a device which would enable a motorcycle without a battery to nevertheless be able to operate the alarm or tracking device.

“The Complainant admits being aware of the insurer’s requirements. If he thought the requirement was not applicable or entertained any doubt in this regard it would have been a simple matter to contact respondent for clarification.

“He did not do so. This is not a situation where the broker incorrectly advised the complainant that, for example, he did not require an alarm or tracking system.

In the result the complaint falls to be dismissed,” said Ms Bam. Click here to read the full determination (PDF file 84kb)