Deanne Wood
The lowered speed limit at a road construction site must be adhered to even after roadworks have been completed, the former Ombudsman for Short-Term Insurance, Deanne Wood, said in a ruling in favour of an insurer which rejected a claim.
She also supported the insurer’s assertion that had it known that the insured’s vehicle was modified, it would not have accepted the risk.
The insured lodged a claim with the insurer for damage to his motor vehicle arising out of an accident with a minibus taxi.
The insurer rejected the claim on the grounds that the insured failed to take all reasonable steps to prevent or minimize the loss in that he was exceeding the speed limit at the time of the collision.
The insurer stated that its experts’ report confirmed that the speed travelled by the insured prior to and at the time of the accident was in excess of 142 km/hr. It was alleged that the legal speed limit in the specific area where the accident occurred was 80 km/h.
The insurer referred to and relied on the following policy wording: “You must take all reasonable care to prevent or minimise loss or damage. If an insured event happens, you must take preventative steps to minimise any extra loss or damage from occurring.”
The insured’s broker submitted that the normal speed limit in the area where the collision occurred was 120 km/hr, without roadworks. During roadworks it was 80km/hr. He submitted that the roadworks had been completed at the time of the accident, leaving both lanes open for traffic. The broker argued that the speed limit of 80 km/h was not applicable anymore.
It was further argued that the insurer should not reject the claim as the speed that the insured was driving at was only one factor that contributed to the extent of the damage. It was argued that it was not the reason that the accident occurred. The broker submitted that the reason the accident occurred was the unlawful act of a taxi driver when he executed a U-turn on the freeway.
Following a request by the insured for a review of an earlier recommendation that the insurer’s decision to reject the claim was correct, the complaint was discussed at an escalation committee meeting comprising the ombudsman, deputy ombudsman and four senior assistant ombudsmen and found that the insurer was entitled to reject the claim.
The committee noted that the insurer had advised that the accident reconstruction expert had inspected the insured’s vehicle and found, among other things, that “the left front wheel and tyre was forcefully dislodged from their mountings, during the primary impact event”.
“During the collision event and the VW’s subsequent tyre-less path of travel over a distance of 224 meters to its final rest position, the front bumper and most of the front mounted engine parts were scraped and torn away.
“The remaining engine parts are buckled down and forcefully pushed down, towards the right-hand side of the engine compartment, from the VW’s post-collision wheel-less path of travel to its final rest position.”
According to the expert, the minimum pre-collision speed of the insured’s vehicle was calculated as having been 142 km/h at the start of the collision event. This indicates the insured vehicle was being driven at a high-speed.
The insurer submitted that, in light of the report and the evidence, it found that the insured failed to take the necessary action and precaution to ensure his safety as well as the safety of other road users in that he deliberately exceeded the speed limit.
The insured’s broker argued that the insurer had not proved its case on the ground on which it had rejected the claim. The broker argued that the taxi collided into the insured from the left side when the taxi made an illegal u turn and that the insured could not foresee this.
The insurer responded that the insured had informed the expert that at the time of the collision he was travelling at 130 km/hr. According to the insurer this showed the insured’s failure to take precaution and action to avoid the accident by deliberately exceeding the speed limit. The insurer submitted that a reasonable person would not drive at an excessive speed, deliberately exceeding the speed limit and that this constituted reckless behaviour.
It was also noted in the loss adjuster’s report that the insured advised that his vehicle had had conversions, such as “cold air inductor, software and semi-slick tyres”. The assessor reported that all this was to make the vehicle faster and louder.
It was also reported that the insured did not disclose that the vehicle had been converted. The loss adjuster advised that when he asked the insured about the conversions, he responded that he had purchased the vehicle like that. The assessor also referred to the recording of the sales conversation where the insured was asked whether his vehicle was rebuilt or modified and the insured said “no”.
The insurer advised that had the insured disclosed that the vehicle was modified, the risk would not have been accepted.
The Ombudsman said that the insured’s version was that he was driving at approximately 130 km/h just before the accident. According to the insurer’s accident reconstruction expert, the speed calculated was 142 km/h just prior to the collision. The insured’s broker confirmed that the road sign for the speed limit was 80km/h at the time of the collision while the roadworks was complete.
“In either case, the insured was driving at a speed which was far in excess of the speed limit at the time of the accident. Even if we were to accept the insured’s version that the roadworks was complete, the speed limit signs were still at 80km/hr and a driver on that stretch of road would still have to adhere to that speed limit.
“Therefore, while the speed limit was 80km/hr and the insured was driving at a speed of between 130km/hr to 142km/hr, we find that he was driving at an excessive speed.
“The policy wording relied on by the insurer is created by the insurer and entrenched in the policy in order to control the risks that the insurer is willing to cover, as it is the insured’s negligence that is covered/assumed by the insurer.
“The purpose of a condition such as this is to ensure that the insured would not refrain from taking precautions that ought to be taken, simply because he was covered against loss by the policy.
“When regard is had to the manner in which the accident occurred and the speed travelled by the insured, we find that the insured was not just negligent but he was reckless and that the speed travelled by the insured was material to the collision. We find that the insured could have foreseen that by travelling at the speed that he was, that he was courting danger.
“Consequently, we find that the insurer is entitled to reject the claim under the due care clause,” the Ombudsman ruled.
The Ombudsman said the insurer had also advised that had it known that the insured’s vehicle was modified, as per the assessor’s report, it would not have accepted the risk.
“This is a basis on which the insurer can reject the claim in its entirety. It may also void the policy. The insurer’s rejection letter refers to the breach of the policy wording in that the insured did not take reasonable care to prevent or minimize the loss.
“The insurer asked the insured at the sale of the policy whether the vehicle was modified and the insured said ‘no’. Had the insured provided the insurer with the correct information, the insurer would not have accepted the risk and the policy would not have incepted.
“Therefore, the insurer is entitled to reject the claim in its entirety on the basis that the vehicle is an unacceptable risk. Consequently, the insured did not have cover for the loss. The insurer advised that it will void the policy and refund the premiums,” the Ombudsman said, adding that it could not fault the insurer’s decision to reject the claim.
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