Recalled vehicles: Insurer must be notified

Clients who don't respond may have to pay

A number of insurance clients and members of the media enquired in the recent past about the implications if a vehicle is involved in an accident as a result of a manufacturing defect after the manufacturer had recalled the vehicle but the insured failed to respond. A typical example would be certain models that were recalled during the past few years because of defects or for adjustments. What is the position of the client who wants to file a claim?

Arnold van der Linde, Executive Chairman of the IntegriSure Group, says it might seem like a simple process where the manufacturer requests clients to bring faulty models in for repair, end of story. In practice, however, it is a different matter.

If a client does not respond to the manufacturer's call and the vehicle is involved in an accident that could possibly be attributed to the defect in question, the insurer has the right to reject such a claim. The question is whether the client had taken all reasonable and possible measures to prevent the cause of a claim, Van der Linde says.

Dr. Johan van Zyl, President and Chief Executive of Toyota SA Motors, says in general clients react very well to recalls, especially if the manufacturer communicates the request well and comprehensively. He says 80% of such clients react immediately. Thereafter, they are scheduled according to the repair capacity of each dealer.

Van Zyl says in only a very small percentage of cases it is difficult to convince clients to bring in their vehicles for the necessary repair or adjustment. According to him 60% of cases are usually repaired within three months and 80% within six months. Only 20% are reluctant to have the fault rectified.

Van der Linde says those 20% of vehicle owners in particular are the ones risking their claims to be rejected in the event of something going wrong as a result of the defect. He advises those clients, whose vehicles are only scheduled for repair at a later stage, to inform their financial advisors and/or insurers accordingly without any delay.

Fact is that the insured is contractually obliged to inform the insurer of any material change to the risk. This will give the insurer an opportunity to evaluate the possible impact of the defect and implement further underwriting measures where necessary.

It is careless to withhold such information from one's insurer and/or broker, Van der Linde says. He strongly advises the owners of recalled vehicles to consult without exception their financial advisors about the steps to be followed, particularly in cases where the roadworthiness of a vehicle is affected.