Consumers are often surprised to learn that insurers can prove reckless driving and reject claims for motor vehicle damage in such instances, says the deputy ombudsman for short-term insurance, Edite Teixeira-McKinon.
She was commenting on a significant increase in motor insurance complaints by policyholders to her office about claims rejected by short-term insurers because policyholders failed to exercise due care. These types of complaints have increased 48% when compared to 2017.
Many policy contracts oblige you, as the insured, to take care to avoid an accident or damage to your goods.
Failure to take due care can entitle an insurer to reject a claim if it can prove that this is what caused the loss or damage to the insured property.
The statistic was revealed in the annual report of the ombudsman for short-term insurance for 2018, which was released this week.
"We have seen a spike in claims being rejected by insurers on the basis of reckless behaviour or reckless driving in motor claims," says Teixeira-McKinon.
The insurers back up their claims with either tracking reports that indicate the speed at which the vehicle was travelling just before impact or with reports prepared by accident reconstruction experts appointed by the insurer when they suspect reckless driving is the cause of an accident. Insurers also rely on information from witnesses.
To succeed with a rejection, all the insurer needs to show is that on the balance of probabilities the conduct of the insured driver was reckless - and not beyond a reasonable doubt, which is the criminal burden of proof.
Unless policyholders can come forward with expert evidence to challenge the findings of the insurer's expert, the ombudsman has no choice but to uphold the rejection of such claims, she says.
Having an accident while travelling at excessive speed can result in extensive damage to a vehicle compared to the damage caused when somebody is travelling within or at the speed limit, she says.
Driving under the influence of alcohol is a different exception to cover in policies, but an insurer may, depending on the circumstances of the accident, also reject these claims on the basis of a lack of due care - acting with due care being an obligation imposed on policyholders in their contracts.
In one case, the driver of a vehicle drove straight over the island in a traffic circle and hit a wall on the other side. The insurer suspected the driver was drunk but because it did not have sufficient evidence to reject the claim on this ground, it rejected the claim for damages on the basis of a lack of due care.
The ombudsman's office upheld the rejected claim.
Teixeira-McKinon warned motorists not to drive recklessly because they face being responsible for expensive repairs to their own motor vehicle as well as paying for the damages to the home or vehicle of third parties.
Claims successfully rejected on the basis of a lack of due care or recklessness have huge financial implications for consumers, she says.Complaints relating to insurers rejecting claims because of drunk driving decreased by 15% last year compared with the previous year, according to the annual report.But, the report notes, driving under the influence remains a very real problem for the insurance industry and the ombudsman's office cautions consumers that their claims may be rejected and justified on circumstantial evidence, even if they have not been tested for alcohol consumption or convicted of a criminal offence in relation to the incident...