OSTI Report: Theft under false pretences

08 June 2017 OSTI

The following case study has been extracted from OSTI Annual Report for 2016.

Santam Insurance Limited

Mr. G’s vehicle, was stolen on 9 October 2016. The insurer rejected Mr. G’s claim on the ground that the vehicle was stolen under false pretences and that the policy excludes cover under these circumstances.

The insurer relied on the following wording in the policy:


1. Voertuig verlies of skade Geen van die volgende word gedek nie, tensy andersins in die
Bylae genoem:

1.7 verlies of skade wat ontstaan uit of wat verband hou met enige ruiltransaksie, kontant- of kredietverkoop transaksie, insluitende diefstal deur middel van valse voorwendsel en bedrog”.

Mr. G advertised his vehicle on a website and received a call from a potential buyer, Mr. X, who was interested in purchasing the vehicle.

An arrangement was made to meet with Mr. X. Mr X. was to pay a R5 000 deposit and was to provide proof of payment to Mr. G.

An sms notification was received by Mr. G from Mr X.’s bank confirming that the deposit had been paid. Mr. G arranged to meet with Mr. X the following day at a shopping mall, where Mr. G would be provided with further proof of payment for the balance of the purchase price. Mr. G would then hand over the vehicle and the relevant documentation to Mr. X.

Before the meeting at the shopping centre, Mr. G received a further sms confirming that the outstanding amount had been paid into his account. However, Mr. G required further proof of payment and, on requesting such proof from Mr. X, he received an email attaching a bank transaction form.

Mr. G attended at the shopping centre in order to complete the transaction. He was approached by Mr. V who informed him that he would be collecting the vehicle on behalf of Mr. X as Mr. X was with his family and was unable to come to the centre. Mr. G attempted to call Mr. X’s bank to determine whether the money had in fact been transferred but he was advised that only an account holder could enquire about payments. Mr. G obtained a copy of Mr. V’s identity document and handed the vehicle over to him. The following day, Mr. G followed up with Mr X.’s bank and was told that he had been given false proof of payment. Further, he found that Mr. X’s ID number did not exist.

Mr. G reported the loss as a theft to the police.

Mr. G submits that he did not hand over the keys to Mr. V voluntarily but that he was afraid for his and his wife’s safety at the time. Mr. G said that Mr. V was accompanied by another male and that he felt that if he did not provide them with the vehicle, there might be “repercussions”. Mr. G said that he felt threatened by Mr. V and his companion and therefore handed over the vehicle keys.  Mr. G also submitted that he did not receive the policy wording from the insurer and that he was unaware of the relevant terms and conditions. Further, he argued that his broker did not do enough to ensure that he was aware of the policy terms and conditions. 

The insurer asserted that Mr. G’s broker had indicated that the policy wording was furnished to Mr. G via registered post at the inception of the policy. The insurer also attached a welcome letter where it was stated that cover provided was subject to certain exclusions which should be perused by the insured. Proof that the documents had been sent by registered post was provided to this office by the insurer. A record of advice was also furnished from the insurer indicating that Mr. G was informed of important information contained in the policy including the policy exclusions.

The Ombudsman found that, based on the evidence, the loss fell within a policy exclusion, namely, theft under false pretences. Mr. G, even though he felt unsafe with Mr. V and his companion and was unable to confirm at that time that the funds had been transferred, handed over the keys to Mr. V, as he feared for his safety. It was apparent that Mr G. suspected at that stage, before handing over the keys and the vehicle that there was something wrong.

The Ombudsman found that as the policy excludes theft under false pretences, there was no cover for this loss.

The Ombudsman also found that there was sufficient evidence to prove that the policy wording was provided to Mr. G’s broker and that Mr. G’s broker advised that the policy terms and conditions were explained to Mr. G.

Consequently, the Ombudsman found that the insurer’s rejection of the claim could not be faulted and the rejection was upheld.

Thasnim Dawood
Senior Ombudsman

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