In favour of the Insurer

Unroadworthy vehcles

The Insured operated a transport business. During July 2008 one of the Insured’s mechanical horse and trailer combinations was involved in a collision, whilst carrying a load of fertiliser. Two persons were killed in the collision. The driver of the insured vehicle disappeared from the scene of the accident but the Insured later managed to make contact with the driver who offered as an explanation for the accident that whilst he was driving down the Kaaimans Pass and changing down gears he stepped on the brake valve but that “the valve got stuck which caused the truck to cut out”. In the process of his descending the mountain pass, the vehicle ran away with him and he collided with another vehicle. It appeared that the driver in question had only been in the employ of the Insured for a period of three weeks prior to the accident.

The Insured intimated a claim against his Insurer for the damage to the vehicle and the loss of the goods in transit. The Insurer rejected liability for the claims on the grounds that the insured vehicle had not been maintained in a roadworthy condition as required by the policy. In particular, it maintained that the braking system of the vehicle did not comply with the statutory regulations governing vehicles operating on a public road. The Insured maintained that the brakes on the trailer were serviced and checked by a specialist on the 22nd March 2008 and that the brakes had also been inspected by the Insured when the vehicle was greased during the last week of June 2008 at which time they were found to be in good condition. The Insured maintained it “had implemented every possible precaution which was reasonably practicable to ensure that the vehicle combination was in a roadworthy condition”. The Insured maintained that it could not foresee a sudden deterioration in the condition of the brakes within a period of three weeks.

The Insurer engaged the services of a specialist automotive technical consultant to inspect the Insured’s vehicle and, in particular, the braking systems of the vehicle. The expert examined the vehicle in detail and identified a number of defects and shortcomings in the braking system. The expert concluded that only the front axle brakes on the combination were operating efficiently and that there was no braking on the rear axles due to all four spring brake boosters which were fitted to the drive axles having been at their maximum stroke. Confirmation had been obtained from the towing operator who recovered the vehicle that rear wheels turned freely and it was possible to salvage the vehicle without having to release the spring brakes. On the trailer only two wheels were found to be operating efficiently. The brake shoes on three wheels were found to be “over-cammed” and on the other wheel, no brake shoes at all were evident. The Insurer also drew attention to the fact that no evidence was produced by the Insured to establish that the brakes on the mechanical horse had been serviced regularly or recently and that the horse and trailer combination had travelled a substantial distance during the three weeks preceding the accident in a time that the brakes were alleged to have been serviced. The Insurer’s contention was that the Insured had an obligation to ensure that the vehicle was in a proper working order before embarking on each new trip and did not have any procedures in place to monitor the state of the vehicles. It was also contended that the Insured admitted to the Insurer’s assessor that the driver had complained previously of trouble with the brakes on the vehicle, but that these reports were dismissed due to the fact that the vehicle had been repaired some three weeks prior to the collision in question.

The Ombudsman, after considering the evidence presented by the Insurer and the provisions of the policy which required the Insured to comply “with current legislation regarding roadworthiness” and to have a valid certificate of fitness, concluded that the Insurer had discharged the onus of establishing that the vehicle did not comply with the current legislation regarding roadworthiness of vehicles and that when viewed objectively, the vehicle was not in a roadworthy condition. The Insured knew of the importance of vehicles being maintained in a roadworthy condition and the consequences of defects in the braking system of a large commercial vehicle carrying a heavy load. Despite the “logistical problem in having a vehicle checked prior to each trip” as maintained by the Insured, the Insured could easily put in place practical steps to check the roadworthiness of vehicles and, in particular, the condition of the braking system of the vehicle on a regular basis. The Insured also had an obligation to investigate properly and timeously any complaints made by his drivers concerning the condition of the brakes. The objective evidence presented by the Insurer had established beyond any doubt that the vehicle had not been properly maintained and indeed if the vehicle had been so maintained the defects identified would not have been present. The Insurer’s rejection of liability was accordingly upheld.


Details of the Claim

The Complainant purchased a vehicle and insurance was arranged via his broker. A proposal form was completed and initialed by him on each page. He was provided with the policy schedule, but denied receiving the policy wording. Six months later the Complainant’s vehicle was stolen and a claim was accordingly registered with the Insurer. Following an investigation the Insurer presented him with a settlement offer which catered for the retail value of the stolen vehicle less the applicable policy deductibles. The retail value, however, was less than the sum insured of the vehicle and for this reason the Complainant rejected the Insurer’s settlement offer.

The Complainant’s View

The Complainant believed that the Insurer should settle the amount of the sum insured. The Insurer referred him to the terms and conditions of the policy and maintained their initial settlement offer. The Complainant then denied receiving the policy wording during the six months of paying his premium and thus felt that he should not be subjected to any of the policy terms and conditions of which he was not made aware. He felt that had he been aware of the same he would have sought cover elsewhere.

The Insurer’s View

The Insurer confirmed that the address, which the Complainant provided on his application for assistance to the Ombudsman’s office, matched their records. They confirmed that set processes and procedures are followed when receiving new business and the policy schedule together with the policy wording is posted to each new policyholder according to the postal address obtained at inception of the policy. If the letter is returned by the postal service then the policyholder is contacted to ensure the correctness of their records; alternatively, it is presumed that the policyholder has received the documents. In this instance, the Insurer had no record of any correspondence previously sent to the Complainant being returned. The Insurer also referred to the policy schedule received by the Complainant, which clearly stated that claims would be settled on retail value as reflected in the auto dealer’s digest.

Ombudsman’s View

The Ombudsman was satisfied that the Insurer had adequately demonstrated its compliance with legislation in its measures taken to ensure that its policyholder was provided with the policy documents.

In light of the extent of business underwritten by the insurer it would be unreasonable to expect the Insurer to issue policy documents via registered post or institute alternate measures specifically to ensure the receipt of correspondence by each and every policyholder. Our national postal service is an accepted means of communication by all Insurers provided the Insurer’s records of the policyholder’s personal details are correct.

Furthermore, the policyholder has been paying his premiums for six months without a concern that his policy documents were not received until a claim was submitted. Policyholders are at liberty to contact the Insurer at any time to request their policy documents. Policyholders must also familiarise themselves with the policy contract and its terms and conditions to ensure that the cover purchased is satisfactory for their specific personal needs.

In regard to the Insurer’s settlement offer, the Ombudsman was of the view that the amount was fair and reasonable. The sum/amount for which the vehicle is insured is normally determined upon purchase of the vehicle and at policy inception. With time, a motor vehicle automatically depreciates in value. Other factors such as mileage and the condition of the vehicle, etc. also contribute to the devaluation of the vehicle.

Unless the manner in which the value of an insured vehicle is determined is expressed in the policy documents, such as in the matter at hand, the motor and insurance industries rely on an auto dealer’s digest, namely the Mead and McGrouther which is updated monthly, as a guide to determining the value of a motor vehicle at any given time.

The Insurer was therefore entitled to rely on the policy terms and conditions to maintain their settlement offer and it was insufficient for the Complainant to rely on his ignorance to same to successfully dispute it. The Complainant was required to prove that he had not received the documents and in light of the correctness of the Insurer’s records, the Complainant was unable to do so. A decision was accordingly made in favour of the Insurer.

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