The Ombudsman for Short-Term Insurance comments on the implications of taking out a driver behaviour monitoring policy

24 November 2015 Dennis Jooste, Ombudsman for Short-Term Insurance
Dennis Jooste, Ombudsman for Short-Term Insurance.

Dennis Jooste, Ombudsman for Short-Term Insurance.

To encourage improved behaviour behind the wheel, some short-term motor insurers will offer clients a discount on the premium if a record of responsible driving is maintained. By installing a driver monitoring device, it will analyse driving behaviour such as harsh accelerating, braking, cornering, excess idling and driving too quickly over speed humps etcetera. It will also record good driving behaviour. Many companies and consumers have opted to install one of these devices in order to monitor and/or improve the way they or their employees drive and to reduce the costs of wear and tear on the vehicle, fuel expenditure and insurance. “However insurers have taken the use of the driver monitoring device a step further”, says Dennis Jooste, Ombudsman for Short-Term Insurance. “As the information is recorded and open to scrutiny, the data can be used to validate or repudiate an insurance claim. However some insurers claim that they will not use the information to repudiate a claim. Consumers are urged to get clarity from the insurer about its policy in this regard”.

In some instances installing a driver monitoring device in the insured’s vehicle is a condition precedent to cover and the data obtained from the device may influence the insurer’s decision whether or not to accept cover or a claim. In a specific complaint referred to the Ombudsman, the insured selected a “Driver Behaviour Policy” with a particular insurer. The policy required the insured to have an approved driver monitoring tracking device installed in his vehicle. The Policy included specific terms and conditions of cover, for example it stipulated that bad driver behaviour would result in the cancellation of the policy. It also stipulated that information obtained from the tracking device would be used at claim stage which could determine the outcome of the claim. At the time of taking out the cover, the insured was advised by the sales consultant from the insurer of the policy terms and conditions and, most importantly, that there would not be cover for any loss resulting from reckless driving. It also stipulated that if the insured was found to have exceeded the speed limit by more than 30km/hour in the 60 seconds leading up to an accident, any claim in respect thereof would not be paid. The insured accepted the terms and conditions of the policy and had a driver monitoring tracking device installed in his vehicle.

Subsequently the insured was involved in a motor vehicle accident and submitted his claim to his insurer. He reported that he was driving at less than 60km/hour at the time of the collision. However when the claim was assessed the insurer obtained a detailed travel report from the tracking company. The report recorded the driver’s behaviour on a daily basis from the time of switching the ignition on to the time of switching it off. On the date of the accident the report indicated that the insured was travelling between 130 and 140 km/hour in a 70km/hour zone. The speed recorded immediately before the collision was 109 km/hour and at the time of impact was 70 km/hour. The insurer concluded that the insured was therefore speeding at the time of the accident and the claim was repudiated.

Upon receipt of the complaint the Ombudsman reviewed the travel report together with the terms and conditions of the policy, as they had been explained to the insured by the sales consultant during the recorded conversation, and found that the insurer had submitted sufficient information to support its repudiation of the claim. The insured’s claim clearly fell within an exclusion of the Driver Behaviour Policy. The travel report indicated that the insured had exceeded the speed limit by more than 30 km/hour in the 60 seconds leading up to the accident.

The Ombudsman also considered the insurer’s compliance with the provisions of the Policyholder Protection Rules where one of the rules is that an insurer must furnish the policyholder with certain particulars of the cover prior to entering into a policy. This information must be confirmed in writing within 30 days and must include a reasonable and general explanation of the principles of the relevant contract and information which will enable the policyholder to make an informed decision. The Ombudsman noted that the requirements were complied with and agreed with the insurer’s decision to repudiate the claim.

The Ombudsman advises consumers to fully acquaint themselves with their policy terms and conditions. They should always adapt their driving behaviour to put safety first and to comply with the requirements of the policy.

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