Is this a reckless debate?

Whether or not a non-life insurer should indemnify an insured for damage to his or her motor vehicle following an accident that is wholly due to reckless behaviour by the insured has been the subject of countless debates, spanning decades. The subject is under scrutiny again following a recent media release by the joint Insurance Ombudsman, in which it warned of a rising number of claims disputes over the so-called duty of care clause; the argument being that driving recklessly by disobeying traffic laws constitutes a breach of same.

They duty of care

Ayanda Mazwi, Senior Assistant Ombudsman, said that a report of complaint trends conducted by the Ombudsman for Short-term Insurance (OSTI) in November last year confirmed that an increasing number of motor vehicle accident claims are being rejected by insurers based on the insured’s breach of a contractual duty of care. Such duty is summarised as “you must exercise all reasonable precautions for the maintenance and safety of the property insured, as well as prevent or minimise loss or damage” or similar. According to the OSTI, any breach of this clause by an insured may warrant the rejection of a claim. 

The duty of care clause applies to all assets on cover on a personal lines policy, but it is not the only clause that could result in the outright rejection of a claim. Your client’s personal lines motor section usually includes a long lists of exclusions for which a claim will not be entertained at all. For example, where a vehicle is used for any purpose other than according to the relevant condition of use; where the vehicle is driven or towed by the insured [or another] while under the influence of intoxicating liquor; and where the vehicle is being driven by the insured [or another] without a valid driver’s license, to name a few. 

Driving in a fast car…

The problem with the duty of care clause and other motor exclusions is that they create an expectation or perception among insureds that their insurer will be looking for any reason to reject their claim. This certainly explains the negative reaction from insurance brokers and their clients when local insurers started integrating tracking devices into their motor insurance packages all those years ago. Modern day telematics devices make it possible for insurers to get a very clear picture of driver behaviour leading up to an accident, including detailed information about vehicle speed and acceleration, braking and turning forces etc. 

Mazwi observed that there were various reasons why an insurer might invoke the duty of care clause, but that it was mainly relied on in cases where the insurer alleged that an insured was driving above the regulated speed. The question, according to the OSTI, is whether insurers may reject a claim because the insured was speeding?  Philosophically we might conjecture: is this to-and-fro debate over recklessness not a bit reckless in and of itself? All that a long-winded and technical debate around recklessness achieves is to make it more subjective, creating loopholes for reckless acts to go unpunished. And that means that all stakeholders in the insurance value chain remain at risk of being prejudiced by another stakeholder’s reckless behaviour. 

Playing devil’s advocate

According to the OSTI, many insurers rely on excessive speed to illustrate recklessness when rejecting a motor claim, which assertion they must prove. The good news for both insured and insurer is that many insureds now have tracking devices installed in their vehicles. 

This writer recalls talking to various insurers around the time telematics devices were becoming popular, and being repeatedly assured that telematics data would not be used to repudiate claims. Wind the clock forward a decade or so, and the OSTI comments that it will consider whether the insured was, in fact, speeding before deciding on a dispute of this nature. “Because the insurer is relying on a breach by the insured of a policy condition or on an exclusion, it carries the burden of proving the breach or exclusion,” they wrote. “The insurer may rely on evidence such as data downloaded from the vehicle’s on-board computer vehicle tracking reports and / or experts in accident reconstruction”. So, clearly, standard practice has shifted. 

Insurance brokers and their clients should note that the accident experts could prove the weakest link when an insurer sets out to prove a speeding allegation. The OSTI said that it would always consider the reliability of the evidence presented by an insurer, adding that it recently instructed an insurer to pay a claim because “the conclusions put forward by an accident reconstruction expert were not based on accurate facts”. In such instances, data from the on-board computer and the vehicle tracking reports are generally accepted. “If it is clear that the insured was speeding, we will then consider the legal principles applicable to the reasonable precautions clause,” said Mazwi. 

Speeding need not be terminal

The remainder of the OSTI press release reminded this writer of why so many insurance matters end up in court or at the various Ombudsman offices to begin with. Simply put, there are too many aspects of apparently simple policy wordings that are open to interpretation. To begin, an insurance policy may not, by default, exclude liability because the insured was negligent. “The legal position is that the insurer must prove that the insured acted recklessly; in this context speeding on its own does not necessarily mean that the insured was reckless,” they write. “Rather, recklessness presupposes foreseeability on the part of the insured”. Hmmm… what does that statement even mean? 

Most FAnews readers will have seen some or other YouTube video of sports car owners testing the limits of their vehicle on public roads, and one cannot help but wonder whether foreseeability stretches to the potential for a massive accident when driving a car capable of 320kmph at a mere 160kmph, for example. Such drivers, overconfident in their own and their vehicle’s capabilities, could claim they felt entirely in control of the circumstances leading up to an accident and therefore did not foresee the resulting mayhem. This may be an extreme example; but arguments about whether going 80kmph in a 60kmph zone is reckless and introduces foreseeability on the insured’s part are more contentious. 

Onus on proof remains with the insurer

According to the OSTI: “The insurer must put forward a convincing argument on which to conclude that the driver foresaw the possibility of an accident and deliberately courted the danger by taking measures which the driver knew were inadequate; alternatively [show that] the driver simply did not care that the measures were inadequate and therefore recklessly reconciled himself or herself with the danger”. Since it is unlikely that a driver will admit recklessness,  noted the OSTI, such shortcoming may be determined by inferential reasoning based on the facts of the case. 

The following is our retelling of a second incident that the OSTI shared. In this case, the insured was driving at night on an unfamiliar road; visibility was poor and the streetlights were nor working. Under these conditions, the insured claimed that he was unaware that he was approaching a T-junction. As he neared the T-junction, on which other traffic had right of way, he became aware of a vehicle approaching from his left. He swerved to avoid the vehicle, running into a tree. One assumes had he not taken this action a motor vehicle collision would have ensued. Furthermore, had the other vehicle not approached, this writer assumes the insured would have driven straight across the junction into whatever physical obstruction lay beyond. 

On matters of probability…

“The insurer’s accident reconstruction expert calculated that the insured was travelling at 104kmph [in a 60kmph zone] at the time,” writes the OSTI. “We concluded that, if the expert’s calculation of the speed was proven, the insured’s conduct would be considered reckless [and that] as a matter of probability, the insured’s conduct was also found to be the cause of the accident because, had he observed the regulated speed, he would have been in a better position to see the intersection, stop and safely execute the turn”. As such, the complaint was adjudicated in favour of the insurer. 

Writer’s thoughts:
The 21^st Century claims assessor has access to a wealth of information that was not available a decade ago. Data reports from telematics devices can be useful for recreating accident scenes, while social media posts often give clues as to events running up to those late night motor vehicle accidents. The question becomes: where does one draw the line? We would love to hear about your or your clients’ personal experiences in dealing with duty of care claim rejections? Please comment below, interact with us on Twitter at @fanews_online or email us your thoughts editor@fanews.co.za.