Ombudsmen clash in speeding Audi case

Fais and short-term insurance ombudsmen disagree over insurance complaint.

Fais Ombudsman Charles Pillai has disagreed with a rejection issued by his short term insurance counterpart.  

Pillai has effectively overturned a ruling that was made by a predecessor of the current short-term insurance ombudsman, Brian Martin. The ruling involves a controversial "Good Citizen Warranty" clause. Martin says he agrees with Pillai's ruling, and has in fact overturned some of his predecessor's rejections involving the same clause.

The case involves a complaint brought by Melishree Maduray of Phoenix, Durban, who insured her turbo-charged Audi A3 through Renasa Insurance Company. Her broker was Action Plan Management.

Maduray overturned her car after swerving to avoid an animal crossing the road. Her complaint was repudiated because the insurer claimed she had contravened a "Good Citizen Warranty". Under the warranty clause a claim would be repudiated if the vehicle was used other than in accordance with the laws, regulations, road and traffic ordinances and bylaws of South Africa.

The insurance company said Maduray was travelling at 161kph before her crash. She had stated in her claim form that she was travelling between 110 and 120kph.

Maduray was apparently busted by her tracking device, which recorded her speed as 161kph.

She complained to the short-term insurance ombudsman, who wrote that "driving at an inappropriate or excessive speed would not by itself constitute a failure to take due care and precaution on the part of the insured...that this would not constitute gross negligence by itself."

He continued: "At best on the facts of the current complaint, it is our view that the conduct of the insured would indicate negligence. However, the purpose of the insurance contract is to provide cover for such negligent conduct."

However, in an about turn, the short-term insurance ombudsman later wrote that he was of the view "that the decision of the insurer to reject the claim cannot be faulted".

Maduray also complained to Pillai, who uphold her complaint. Pillai said the broker was unable to prove that it had informed Maduray of the Good Citizen Warranty clause.

Pillai said he was of the view that the insurer was also at fault.

Referring to the Good Citizen Warranty, Pillai said a careful reading of the wording of the warranty showed it was virtually impossible for an insured to at all times comply with all of its provisions, which were onerous in the extreme.

"I dare say that it would be virtually impossible to find a driver who has not at some or other time inadvertently, if not deliberately, contravened one or other road traffic law or regulation."

He ordered both broker and insurer to pay Maduray R109 345 compensation for damage plus interest.

The Fais ombudsman handles complaints relating to financial services providers. For more information, visit http://www.faisombud.co.za/ 

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